LO. 7, 8, 11 The RB Partnership is owned equally by Rob and Bob. Bobs basis is $14,000 at the beginning of the tax year. Robs basis is $9,000 at the beginning of the year. RB reported the following income and expenses for the current tax year:

Sales revenue	$ 130,000
Cost of sales	45,000
Distribution to Rob	10,000
Depreciation expense	12,000
Utilities	15,000
Rent expense	16,000
Qualified dividends	4,000
Payment to Mount Vernon Hospital
for Bobs medical expenses	8,000

Determine the ordinary partnership income and separately stated items for the partnership.

Calculate Bobs basis in his partnership interest at the end of the tax year. What items should Bob report on his Federal income tax return?

Calculate Robs basis in his partnership interest at the end of the tax year. What items should Rob report on his Federal income tax return?

Q9: LO. 7, 10 FredCo and Fran are equal partners in the calendar year F & F Partnership. FredCo uses a fiscal year ending June 30, and Fran uses a calendar year. FredCo receives an annual guaranteed payment of $50,000. F & Fs taxable income (after deducting FredCos guaranteed payment) is $40,000 for 2010 and $50,000 for 2011.

What is the amount of income from the partnership that FredCo must report for its tax year ending June 30, 2011?

What is the amount of income from the partnership that Fran must report for her tax year ending December 31, 2011?

Q10: LO. 11 Four GRRLs Partnership is owned by four sisters. Lisa holds a 70% interest; each of the others owns 10%. Lisa sells investment property to the partnership for its FMV of $100,000( Lisas basis is $150,000).

How much loss, if any, may Lisa recognize?

If the partnership later sells the property for $160,000, how much gain must it recognize?

Q11: LO. 11 Haydens outside basis in his interest in the HIGH Partnership is

$420,000. In a proportionate nonliquidating distribution, the partnership distributes to him cash of $100,000, inventory ( FMV of $90,000, basis to the partnership of $60,000), and land ( FMV of $100,000, basis to the partnership of $75,000). The partnership continues in existence.

Does the partnership recognize any gain or loss as a result of this distribution?

Does Hayden recognize any gain or loss as a result of this distribution?

Calculate Haydens basis in the land, in the inventory, and in his partnership interest immediately following the distribution.

Q12: LO. 11 Marks basis in his partnership interest is $39,000. In a proportionate nonliquidating distribution, Mark receives $30,000 of cash and two inventory items, each with a basis of $10,000 to the partnership. The values of the inventory items are $15,000 and $5,000.

How much gain or loss, if any, must Mark recognize on the distribution?

What basis will Mark take in each inventory item?