Please complete the following homework problems for a partnership tax class. If you have any questions, let me know. See the attached document for the three homework problems. Also, attached is the template for the answers.

Assets Inside Basis FMV Liabilities Capital Account Outside Basis Capital Account Ash, Madeline, and Ed came together to form a partnership to offer zombie survival training. Ash contributed land he had held for one year, including a mountain cabin where customers could not only train, but stay overnight. The land had a basis of $25,000 and the mountain cabin had a basis of $21,500, and the estimated fair market value at the time of the contribution was $25,000 for the land and $25,000 for the building. Madeline contributed an armory that she had purchased two years ago, with a basis of $43,000 and a fair market value of $50,000. The armory had a useful life of 8 years remaining and was encumbered by a $36,000 recourse loan. Ed contributed $50,000 in cash. At the beginning of the first year, the partnership purchased equipment for $40,000. The equipment was 5 year equipment, but had to be scraped at the end of the second year due to an animal's attack on the equipment. The partnership received no reimbursement for insurance on the equipment. In the first year, the partnership lost $12,000 of ordinary income. In the second year, the partnership lost an additional $18,000 of ordinary income and another $33,000 capital loss on some equipment that was purchased at the beginning of the first year, and then sold at the end of the second year. Special allocations required under Section 704(c) are not required due to the small disparities rules. The partnership agreement meets the requirements for special allocations under Section 704(b) but instead of requiring that negative capital accounts be restored, the partnership agreement contains a qualified income offset provision for partner's with negative capital accounts. a. b. c. Show the allocation of losses to each partner for the first and second years, as well as any applicable loss limitations and carryforwards. Indicate the character of the allowed and loss carryforwards where appropriate. Show the outside basis for each partner for the end of the year.Repeat a. and b. assuming that the loan securing the armory is a non-recourse loan? 2. Daphne, Frederic, Wilma, and Lawrence were all general partners of the Zombie Hunters Inc. partnership which was formed on January 1, 2014 to hunt Zombies and other supernatural beings in castles, theaters, and other public places across the world. Their dog, Sampson also often helped them solve their mysteries. The partnership is a calendar year partnership. Daphne, Fredrick, and Wilma contributed cash of $56,250. Lawrence contributed a cargo van that he had used in his organic herb business prior to joining the partnership. The Cargo Van had a basis of $37,500 and a fair market value of $60,000 at the time of contribution. Lawrence had purchased the cargo van for $75,000 2 years ago. At the time of purchase Lawrence paid $15,000 in cash and used a non-recourse from Shaggysbankandcreditunion for $60,000 to pay the rest. Lawrence still owed $45,000 on the loan at the time of contribution. The partnership agreement stated that profits would be split as follows: Daphne 35%, Wilma 25%, Frederic 20%, and Lawrence 20% while losses were to be split based on the initial capital accounts of the partnership. The partnership agreement also stated that partners with deficient capital accounts would be subject to qualified income offset as quickly as possible following the deficiency in the capital account. The partners needed a place to operate out of and elected to purchase a building on a parcel of land instead of renting. On January 4, 2014 the partnership purchased a building costing $90,000 and the land the building was on costing another $30,000. The partnership was interested in preserving cash to ensure that they would have sufficient funds to operate to a point where the business could become profitable. The partners elected to pay 20% of the purchase price of the land and building in cash and finance the rest through a secured loan from Megabank. The building and land appraised for $135,000. The building had a depreciable life of 25 years for tax purposes and 30 years for economic purposes. Now that they had the building, the partners needed equipment to detect and catch crooks and supernatural beings. They found the equipment for sale at a local retailer on January 7 th, 2014, for a total cost of $187,500. The partners elected to pay $18,750 in cash for the equipment but also sought a small business loan through the local government for the remainder of the cash necessary to purchase the equipment. They were approved for a recourse business loan for $135,000. At this point, Wilma sought a recourse loan for $33,750 from the bank that she had been using since she got her first job 10 years ago, WilmasBank. WilmasBank agreed to lend the partnership the cash on the condition that Wilma served as the guarantor to the loan. The word secure in the paragraph speaking about the building and the land purchase on Jan. 4th should be unsecured. The loan taken out on Jan. 4th is a recourse loan. To do: a. Set up the initial balance sheet as of January 1, 2014, including the allocation of the non- recourse loan. b. Show the Balance Sheet as of January 4, 2014 before allocating the recourse loans. Ignore Depreciation. c. Show the doomsday scenario for recourse loans. Page 4 of 6 Accounting 7201 Exam 2 10/23/2014 d. Show the Balance Sheet as of January 4, 2014 after allocating the recourse loans. Ignore Depreciation. e. Show the Balance Sheet as of January 7, 2014 before allocating the new recourse loans. Ignore Depreciation. f. Show the doomsday scenario for the new recourse loans. g. Show the Balance Sheet as of January 7, 2014 after allocating the new recourse loans. Ignore Depreciation. Page 5 of 6 3. Wendy is looking to expand her current business, Zombie Nation. She currently has been providing training at her shooting range, but wants to seize a rare opportunity to purchase adjacent land so that she can develop an entire hunting ground for additional training scenarios, as well as non-zombie oriented events. She convinces two other investors, Jack and Danny, that the expansion is a good idea. They decide to form a partnership, in which Wendy and Jack will be general partners and Danny will be a limited partner. Wendy contributes her current property, which has a current basis and fair market value for the land of $40,000 and a basis of $90,000 and $220,000 for the building. The building on the property has a remaining tax useful life of 8 years, but had the building been built at the current time, would have had a useful life of 20 years. Jack contributed cash worth $150,000 and stock worth $90,000, which had a basis of $70,000. Danny contributed $220,000 in cash. The business used $250,000 of the cash to purchase the adjacent property. There were no buildings on this property. Another $50,000 worth of 7-year property was purchased at this time as well (assume straight line depreciation for 7 years). For all years in question, assume that prior to considering depreciation expenses, profits exceed all non-depreciation related expenses by $22,000. Assume the partner's agreed to use the curative allocation method with respect to Section 704(c ). Show the depreciation allocation to each of the partners for both tax and book purposes for the first ten years of operations. In year 5, the partner's decide that the original property has a greater market value than the new property purchased. In order to generate cash to expand operations, the partners agree to sell the land and building that