Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Exercise 21-22 (Algorithmic) (LO. 10) On June 1 of the current tax year, Elisha and Ezra (who are equal partners) contribute property to form the

image text in transcribed
Exercise 21-22 (Algorithmic) (LO. 10) On June 1 of the current tax year, Elisha and Ezra (who are equal partners) contribute property to form the Double E Partnership. Elisha contributes cash of $249,120. Ezra contributes a building and land with an adjusted basis and fair market value of $415,200, subject to a liability of $166,080. The partnership borrows $25,950 to finance construction of a parking lot in front of the building. At the end of the first year (December 31), the accrual basis partnership owes $10,380 in trade accounts payable to various creditors. The partnership reported net income of $38,925 for the year that they share equally. Assume that Elisha and Ezra share equally in partnership liabilities. How much is Elisha's basis in the partnership interest on December 31? Ezra's? Round interim and final answers to whole dollars. Elisha's basis: $ Ezra's basis: $ 286,747.5 X 286,747.5 X Feedback Check My Work A partner's adjusted basis in a newly formed partnership usually equals (1) the adjusted basis in any property contributed to the partnership plus (2) the fair market value of any services the partner performed for the partnership (i.e., the amount of ordinary income reported by the partner for services rendered to the partnership). After the partner is admitted to the partnership, the partner's basis is adjusted for numerous items. Partnership debt includes any partnership obligation that creates an asset; results in an expense to the partnership; or results in a nondeductible, noncapitalizable item at the partnership level. This definition includes certain contingent liabilities

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Inventory

Authors: Steven M. Bragg

2nd Edition

1938910648, 9781938910647

More Books

Students also viewed these Accounting questions

Question

Determine miller indices of plane A Z a/2 X a/2 a/2 Y

Answered: 1 week ago