Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Suzanne and Bob form the SB General Partnership as equal partners. They make the following contributions. Individuals. Asset. basis. FMV Suzanne. cash. $45000. $45000 inventory.
Suzanne and Bob form the SB General Partnership as equal partners. They make the following contributions.
Individuals. Asset. basis. FMV
Suzanne. cash. $45000. $45000
inventory. 14,000. 15,000
Bob. Land. 45,000. 40,000
building. 50,000. 100,000
The SB Partnership assumes the $80,000 recourse mortgage on the building that Bob contributes, and the partners have the economic risk of loss on the mortgage equally, Bob has claimed $40,000 in straight line depreciation under the MACRS rules on the building, Suzanne is a stockbroker and contribute securities from her inventory. The partnership will hold them as an investment.
a. What amount and character of gain or loss must each partner recognize on the formation of the partnership?
b. What is each partner basis in his or her partnership interest?
c. What is the partnership's basis in each asset?
d. what is the partnership's initial book value of each asset?
e. The partnership holds the securities for two years and sell them for $20,000, what amount and character of gain must the partnership and each partner report?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started