HANDOUT #5 1. Enerico contributes $100,000 cash in exchange for a 40% interest in the calendar year ABC LLC. This year, ABC generates $80,000 of ordinary taxable income. Enerico withdraws $10,000 cash from the partnership at the end of the tax year. a. Compute Enerico's gross income from ABC's ordinary income for the tax year b. Compute Enerico's gross income from the LLC's cash distribution. 2. Henrietta transfers cash of $75,000 and equipment with a fair market value of $25,000 (basis to her as a sole proprietor, $10,000) in exchange for a 40% profit and loss interest worth $100,000 in the XYZ Partnership. a. Compute Henrietta's realized and recognized gains from the asset transfers Compute Henrietta's basis in her interest in XYZ. b. c. What is XYZ's basis in the equipment that it now holds? 3. At the beginning of the tax year, Barnaby's basis in the BBB Partnership was $50,000, including his $5,000 share of partnership debt. At the end of the tax year, his share of the entity's debt was $8,000. Barnaby's share of BBB's ordinary income for the year was $20,000, and he received cash distributions totaling $12,000. In addition, his share of the partnership's tax-exempt income was $1,000. Determine Barnaby's basis at the end of the tax year. 4. Emma and Laine form the equal EL Partnership. Emma contributes cash of $100,000. Laine contributes property with an adjusted basis of $40,000 and a fair market value of $100,000. How much gain, if any, must Emma recognize on the transfer? Must Laine recognize any gain? If so, how much? a. b. What is Emma's basis in her partnership interest? c. What is Laine's basis in her partnership interest? t basis does the partnership take in the property transferred by Laine? formed the equal LJ Partnership on January 1 of the current 5. Liz and John year. Liz e contributed $80,000 of cash and land with a fair market value of fair market value of $170,000 and an adjusted basis of $20,000.John How much gain or loss will Liz, John, and LJ realize? 000 and an adjusted basis of $75,000. John contributed equipment reviously used the equipment in his sole proprietorship. a. b. How much gain or loss will Liz, John, and LJ recognize? c. What bases will Liz and John take in their partnership interests? d. What bases will LJ take in the assets it receives? e. How will LJ depreciate any assets it receives from the partners