Problem 49

Suzy contributed business-related assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in the Suz-Anna Partnership. Anna contributed land and a building valued at $640,000 (basis of $ 380,000) in exchange for the remaining ^0% interest. Anna's property was encumbered by a qualified nonrecourse dept of $100,000, which was assumed by the partnership. The partnership reports the following income and expenses for the current tax year: Sales 560,000 Utilities, salaries, and other operating expenses 360,000 short-term capital gain 10,000 tax-exempt interest income 4,000 charitable contributions 8,000 distribution to suzy 10,000 distribution to ana 20,000 During the current tax year, Suz-Anna refinaced the land and building. At the end of the year, Suz-Ana had recourse debt of $100,000 for partnership accounts payable and qualified nonrecourse debt of $200,00 a)What is suzy's basis after formation of the partnership? Anna's basis? b)What income and seperately stated items does the partnership report on Suzy's schedule K-1? What items does Suzy report on her tax return? c) Assume that all partnership debts are shared proprtionately. At the end of the tax year, what are Suzy's basis and amount at risk in her partnership interest