Loland Real Estate LP The Leland Real Estate Limited Partnership (Leland) was formed on January 1 Year One, to purchase construct, and manage residential real estate. The partnership adopted the accrual method of accounting and a calendar year for federal income tax purposes on February 2. Year Ono, Leland purchased the Longstreet Manor apartment complex for a total price of $5,000,000 of the purchase price $1,000,000 was allocated to the land, and $4.000.000 was allocated to the buildings Leland financed the acquisition by obtaining a fifteen year, three percent interest rate, $4,500,000 mortgage from a londer that is unrelated to any of the Leland partners. The mortgage is secured by the apartment complex, but it is fully recourse to the partnership No other properties were purchased during the year The Leland partnership agreement provides that the corporate general partner KLM Properties Inc (KLM) will receive an annual management fee equal to 5 percent of the gross rental income earned by the partnership. This fee is reasonable by local industry standards. In return for the fee, KLM will provide all necessary services, so that Leland need not hire any partnership employees. All partnership taxable income, gain, or loss will be allocated 5 percent to KLM and 95 percent to the limited partners, based on each limited partner's specified percentage interest. The partnership agreement provides that partners' capital accounts will be determined and maintained in accordance with the $704(b) regulations, and that liquidating distributions will be made in accordance with capital account balances. As the general partner, KLM must restore any deficit balance in its capital account upon liquidation; limited partners are not subject to this deficit restoration requirement. However, the partnership agreement does contain a "qualified income offser to satisfy the alternate test for economic effect In Varna Vint Inein Chamberlain the partnership agreement does contain a "qualified Income offset" to satisfy the alternate test for economic effect On January 20. Year One, your client Josie Chamberlain contributed undeveloped land, known as Claremont Comers, and various intangible assets such as goodwill associated with her reputation, to Leland in exchange for a 38 percent limited partnership interest (.e., Josie will receive 40 percent of the 95 percent allocations to the limited partners). KLM, as general partner, agreed to this exchange because the land is situated ideally for future development as residential rental property Josie inherited Claremont Comers a number of years ago, and her tax basis in the property is $50,000; the appraised value of the land at the date of contribution was $75,000, and the entry to Josie's partnership capital account properly reflected this contributed value. The partnership agreement provides that limited partners cannot be called upon to make mandatory additional capital contributions in the future Chamberlain is a plastic surgeon employed by a medical professional corporation. During Year One, she received a salary of $330,000 for her medical services. She also earned $19.400 of dividend and capital gain income from her mutual funds, and an allocation of $20,600 of operating business income from an oil and gas partnership in which she has a 0 3 percent limited partnership interest Chamberlain Limited Partner Other Limited Partner KLM General Partner Leland Real Estate Claremont Comers Longstreet Manor A summary of Leland's operating revenues and expenses for Year One is attached Compute Leland's taxable income or loss for the period, and determine the amount of the income or loss that is (1) allocable to and (2) deductible by Josie Chamberlain on her Year One federal individual income tax retum Leland Real Estate Limited Partnership Operating Revenues and Expenses For January 1 December 31, Year One $ 2,100,000 Gross rental revenues S Operating expenses for properties Repairs and maintenance Interest expense Property taxes 1,700,000 212,000 126,000 110,000 2,148,000 S Net cash flow from operations (48,000) "Leland financed the negative cash flow from operations with short term recourse borrowing The management fee is not included in the above expense but should be taken into account in determining Page > of DOM Loland Real Estate LP The teland Real Estate Limited Partnership (Leland) was formed on January 1 Year One to purchase construct, and manage residential real estate. The partnership adopted the accrual method of accounting and a calendar year for federal income tax purposes on February 2 Year One, Leland purchased the Longstreet Manor apartment complex for a total price of $5,000,000 of the purchase price, 51.000.000 was nilocated to the land, and 54 000.000 was allocated to the buildings Leland financed the acquisition by obtaining aheen year, the percent interest rate 54,500,000 mortgage from a londer that is unrelated to any of the Leland partners. The morongo is secured by the apartment complex but it is fully recourse to the partnership No other properties were purchased during the year The Leand partnership agreement provides that the corporate general partner, KLM Properties inc (KLM), will receive an annual management foe equal to 5 percent of the gross rental income eamed ty the partnership This fee is reasonable by local industry standards. In return for the fee, KLM wit provide necessary services, so that Leland need not hire any partnership employees. All partnership taxable Income gain, or loss will be allocated 5 percent to KLM and 95 percent to the limited partners, based on each limited partner's specified percentage interest The partnership agreement provides that partners' capital accounts will be determined and maintaned in accordance with the 5704/b) regulations, and that quidating distributions will be made in accordance with capital account balances As the general partner, KLM must restore any deficit balance in its capital account upon liquidation limited partners are not subject to this deficit restoration requirement. However, the partnership agreement des contain a qualified income offset to satisfy the alternate best for economic effect On January 20. Year One, your client Josie Chamberlain contributed undeveloped and, known as Claremont Corners, and various intangible assets such as goodwill associated with her hann fargent limited 10. Known as Claremont Comers, and various intangible assets such as goodwill associated with her reputation, to Leland in exchange for a 38 percent limited partnership interest (e. Josie will receive 40 percent of the 95 percent allocations to the limited partners), KLM, as general partner, agreed to this exchange because the land is situated ideally for future development as residential rental property Josie inherited Claremont Comers a number of years ago, and her tax basis in the property is $50,000; the appraised value of the land at the date of contribution was $75,000, and the entry to Josie's partnership capital account properly reflected this contributed value. The partnership agreement provides that limited partners cannot be called upon to make mandatory additional capital contributions in the future Rog 51.70416)(2X) Chamberlain is a plastic surgeon employed by a medical professional corporation During Year One, she received a salary of $330,000 for her medical services. She also earned $19,400 of dividend and capital gain income from her mutual funds, and an allocation of $20,600 of operating business income from an oil and gas partnership in which she has a 0 3 percent limited partnership interest. KIM General Partner Chamberlain Limited Partner Omer med Part Liland Real Estate Longstreet Manor Calcol come A summary of Lands operating revenues and expenses for Year One is attaches. Computer Leland's taxable income or loss for the period and determine the amount of the income or loss that is (1) allocable becamberlainan Year One federal individual income tax return Loud A summary of Lelana s operaung revenus expetisus di wib dildo taxable income or loss for the period, and determine the amount of the income or loss that is (1) allocable to and (2) deductible by Josie Chamberlain on her Year One federal individual income tax returi Leland Real Estate Limited Partnership Operating Revenues and Expenses For January 1 December 31, Year One Gross rental revenues $ 2,100,000 Operating expenses for properties Repairs and maintenance Interest expense Property taxes 1,700,000 212,000 126,000 110,000 2,148,000 S (48,000) Net cash flow from operations "Leland financed the negative cash flow from operations with short term recourse borrowing. The management fee is not included in the above expense but should be taken into account in determining the solution Loland Real Estate LP The Leland Real Estate Limited Partnership (Leland) was formed on January 1 Year One, to purchase construct, and manage residential real estate. The partnership adopted the accrual method of accounting and a calendar year for federal income tax purposes on February 2. Year Ono, Leland purchased the Longstreet Manor apartment complex for a total price of $5,000,000 of the purchase price $1,000,000 was allocated to the land, and $4.000.000 was allocated to the buildings Leland financed the acquisition by obtaining a fifteen year, three percent interest rate, $4,500,000 mortgage from a londer that is unrelated to any of the Leland partners. The mortgage is secured by the apartment complex, but it is fully recourse to the partnership No other properties were purchased during the year The Leland partnership agreement provides that the corporate general partner KLM Properties Inc (KLM) will receive an annual management fee equal to 5 percent of the gross rental income earned by the partnership. This fee is reasonable by local industry standards. In return for the fee, KLM will provide all necessary services, so that Leland need not hire any partnership employees. All partnership taxable income, gain, or loss will be allocated 5 percent to KLM and 95 percent to the limited partners, based on each limited partner's specified percentage interest. The partnership agreement provides that partners' capital accounts will be determined and maintained in accordance with the $704(b) regulations, and that liquidating distributions will be made in accordance with capital account balances. As the general partner, KLM must restore any deficit balance in its capital account upon liquidation; limited partners are not subject to this deficit restoration requirement. However, the partnership agreement does contain a "qualified income offser to satisfy the alternate test for economic effect In Varna Vint Inein Chamberlain the partnership agreement does contain a "qualified Income offset" to satisfy the alternate test for economic effect On January 20. Year One, your client Josie Chamberlain contributed undeveloped land, known as Claremont Comers, and various intangible assets such as goodwill associated with her reputation, to Leland in exchange for a 38 percent limited partnership interest (.e., Josie will receive 40 percent of the 95 percent allocations to the limited partners). KLM, as general partner, agreed to this exchange because the land is situated ideally for future development as residential rental property Josie inherited Claremont Comers a number of years ago, and her tax basis in the property is $50,000; the appraised value of the land at the date of contribution was $75,000, and the entry to Josie's partnership capital account properly reflected this contributed value. The partnership agreement provides that limited partners cannot be called upon to make mandatory additional capital contributions in the future Chamberlain is a plastic surgeon employed by a medical professional corporation. During Year One, she received a salary of $330,000 for her medical services. She also earned $19.400 of dividend and capital gain income from her mutual funds, and an allocation of $20,600 of operating business income from an oil and gas partnership in which she has a 0 3 percent limited partnership interest Chamberlain Limited Partner Other Limited Partner KLM General Partner Leland Real Estate Claremont Comers Longstreet Manor A summary of Leland's operating revenues and expenses for Year One is attached Compute Leland's taxable income or loss for the period, and determine the amount of the income or loss that is (1) allocable to and (2) deductible by Josie Chamberlain on her Year One federal individual income tax retum Leland Real Estate Limited Partnership Operating Revenues and Expenses For January 1 December 31, Year One $ 2,100,000 Gross rental revenues S Operating expenses for properties Repairs and maintenance Interest expense Property taxes 1,700,000 212,000 126,000 110,000 2,148,000 S Net cash flow from operations (48,000) "Leland financed the negative cash flow from operations with short term recourse borrowing The management fee is not included in the above expense but should be taken into account in determining Page > of DOM Loland Real Estate LP The teland Real Estate Limited Partnership (Leland) was formed on January 1 Year One to purchase construct, and manage residential real estate. The partnership adopted the accrual method of accounting and a calendar year for federal income tax purposes on February 2 Year One, Leland purchased the Longstreet Manor apartment complex for a total price of $5,000,000 of the purchase price, 51.000.000 was nilocated to the land, and 54 000.000 was allocated to the buildings Leland financed the acquisition by obtaining aheen year, the percent interest rate 54,500,000 mortgage from a londer that is unrelated to any of the Leland partners. The morongo is secured by the apartment complex but it is fully recourse to the partnership No other properties were purchased during the year The Leand partnership agreement provides that the corporate general partner, KLM Properties inc (KLM), will receive an annual management foe equal to 5 percent of the gross rental income eamed ty the partnership This fee is reasonable by local industry standards. In return for the fee, KLM wit provide necessary services, so that Leland need not hire any partnership employees. All partnership taxable Income gain, or loss will be allocated 5 percent to KLM and 95 percent to the limited partners, based on each limited partner's specified percentage interest The partnership agreement provides that partners' capital accounts will be determined and maintaned in accordance with the 5704/b) regulations, and that quidating distributions will be made in accordance with capital account balances As the general partner, KLM must restore any deficit balance in its capital account upon liquidation limited partners are not subject to this deficit restoration requirement. However, the partnership agreement des contain a qualified income offset to satisfy the alternate best for economic effect On January 20. Year One, your client Josie Chamberlain contributed undeveloped and, known as Claremont Corners, and various intangible assets such as goodwill associated with her hann fargent limited 10. Known as Claremont Comers, and various intangible assets such as goodwill associated with her reputation, to Leland in exchange for a 38 percent limited partnership interest (e. Josie will receive 40 percent of the 95 percent allocations to the limited partners), KLM, as general partner, agreed to this exchange because the land is situated ideally for future development as residential rental property Josie inherited Claremont Comers a number of years ago, and her tax basis in the property is $50,000; the appraised value of the land at the date of contribution was $75,000, and the entry to Josie's partnership capital account properly reflected this contributed value. The partnership agreement provides that limited partners cannot be called upon to make mandatory additional capital contributions in the future Rog 51.70416)(2X) Chamberlain is a plastic surgeon employed by a medical professional corporation During Year One, she received a salary of $330,000 for her medical services. She also earned $19,400 of dividend and capital gain income from her mutual funds, and an allocation of $20,600 of operating business income from an oil and gas partnership in which she has a 0 3 percent limited partnership interest. KIM General Partner Chamberlain Limited Partner Omer med Part Liland Real Estate Longstreet Manor Calcol come A summary of Lands operating revenues and expenses for Year One is attaches. Computer Leland's taxable income or loss for the period and determine the amount of the income or loss that is (1) allocable becamberlainan Year One federal individual income tax return Loud A summary of Lelana s operaung revenus expetisus di wib dildo taxable income or loss for the period, and determine the amount of the income or loss that is (1) allocable to and (2) deductible by Josie Chamberlain on her Year One federal individual income tax returi Leland Real Estate Limited Partnership Operating Revenues and Expenses For January 1 December 31, Year One Gross rental revenues $ 2,100,000 Operating expenses for properties Repairs and maintenance Interest expense Property taxes 1,700,000 212,000 126,000 110,000 2,148,000 S (48,000) Net cash flow from operations "Leland financed the negative cash flow from operations with short term recourse borrowing. The management fee is not included in the above expense but should be taken into account in determining the solution