Partners balance sheet at June 30, 2023 is projected to look as follows:

Tax Basis FMV

Cash $ 40,000 $ 40,000

Building $ 0 $ 1,000,000

Land $100,000 $ 500,000

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Total $ 140,000 $1,540,000

Capital Accounts

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Beth $ 35,000 $ 385,000

Ellen $ 35,000 $ 385,000

Marty $ 35,000 $ 385,000

Erica $ 35,000 $ 385,000

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Total $ 140,000 $ 1,540,000

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Recently Arnold approached Beth and offered to purchase Beths 25% partnership interest for $385,000 in cash effective at 12:01AM on July 1, 2023. Ellen, Marty and Erica are not interested in selling their partnership interests, dont want to sell the land/building and wish to remain as partners in the partnership; but they are willing to admit Arnold into the partnership. The land and building owned by Tropicana Partners is subject to what is known as a triple-net lease. Under a triple net lease, the tenant is responsible for all operating costs of the property, including maintenance, repairs, real estate taxes and insurance. The tenant pays Tropicana Partners $10,000 each month in cash under the lease. Tropicana Partners immediately distributes this $10,000 each month pro-rata to the partners. You can assume that there is no IRC 1250 recapture applicable to the building, you can also assume that Tropicana Partners is a calendar year taxpayer.

prepare their 2023 partnership tax return and the attendant Schedules K-1. For planning and estimated tax purposes you are being asked to prepare draft tax year 2023 Schedules K-1 for: Arnold, Beth and Ellen.