Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 1 2 pts Lemon, Lime, and Orange, three cash method, calendar year individuals, form Starburst General Partnership to create fruit candies. Before forming this

image text in transcribed
image text in transcribed
Question 1 2 pts Lemon, Lime, and Orange, three cash method, calendar year individuals, form Starburst General Partnership to create fruit candies. Before forming this partnership, they each had their own sole proprietorship. The partners contribute the following property in each case worth $1,600 net of fiabilities) in exchange for equal 1/3 interests in the partnership's capital, profits and losses (see the table below of property contributed by each partner). The partnership assumes all liabilities encumbering the contributed assets. Assume that the partners are responsible for an equal share of the partnership's liabilities. What is the most that any specific partner recognizes on these transactions? Lemon contributes land with a fair market value of $3,440, which is encumbered by a recourse mortgage of $2,160. Lemon has held the land for several years as an investment, and his basis in the land is $800, Lemon also contributes $320 in cash. Lime contributes a building, a 5 1231 asset, with a value of $2,080 in which Lime has an adjusted basis of $1,040. The building was purchased several years ago by Lime and is subject to a recourse mortgage $480 Orange contributes zero basis accounts receivable from his business worth $2,800 and assigns his accounts payable of $1.200 to the partnership $480 OSO O $160 $800 D Question 1 2 pts Lemon, Lime, and Orange, three cash method, calendar year individuals, form Starburst General Partnership to create fruit candies. Before forming this partnership, they each had their own sole proprietorship. The partners contribute the following property in each case worth $1,600 net of liabilities) in exchange for equal 1/3 interests in the partnership's capital, profits and losses (see the table below of property contributed by each partner). The partnership assumes all liabilities encumbering the contributed assets. Assume that the partners are responsible for an equal share of the partnership's liabilities. What is the most that any specific partner recognizes on these transactions? Lemon contributes land with a fair market value of $3,440, which is encumbered by a recourse mortgage of $2,160. Lemon has held the land for several years as an investment, and his basis in the land is $800. Lemon also contributes $320 in cash. Lime contributes a building, a 5 1231 asset, with a value of $2,080 in which Lime has an adjusted basis of $1,040. The building was purchased several years ago by Lime and is subject to a recourse mortgage $480. Orange contributes zero basis accounts receivable from his business worth $2,800 and assigns his accounts payable of $1,200 to the partnership . O $480 OSO O $160 $800

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Theory

Authors: Craig Deegan

3rd Edition

0070277265, 978-0070277267

More Books

Students also viewed these Accounting questions