This activity consists of two tax years. Year one calculation were completed in the Ch 2 Tax Basis Year One. Year two calculations will be completed in this Ch 2 STUDENT Tax Basis Year Two. The calculations from year one are the starting point for year two so it is essential that year one calculations to build on this assignment. DO NOT COMPLETE YEAR ONE CALCULATIONS IN THIS MODULE! ONLY YEAR TWO CALCULATIONS.Show all calculations. Thanks.

YEAR TWO Shaded green areas are facts This activity consists of two tax years. Year one calculation were completed in a previous module. Year two calculations will be completed in this module. The calculations from year one are the starting point for year two so it is essential that you use your year one calculations to build on this assignment. DO NOT COMPLETE YEAR ONE CALCULATIONS IN THIS MODULE! FACTS: Partnership Operations Year Two Assume net income is kept in the partnership to fund operations Ordinary Income Separately Stated Income Charitable Contributions Non-deductible Expenses $ $ $ $ $ 197,400 18,600 (12,000) (9,800) 194,200 Bank loan taken out by partnership - increases cash and notes payable $ 300,000 SUBMISSION GUIDELINES: 1.) Show all calculations. I will not review Excel formulas. You must show me your work by typing it out. This is because your paper will be submitted in PDF format, not Excel. 2.) You may prepare your work in Excel however you MUST format it and save it in PDF format before submitting it. To save an excel work-book in PDF do the following steps: - Click on the last tab of the top tool bar called "Acrobat" - Click on "Create PDF" - "Add" the "Sheets in Excel" to "Sheets in PDF" by clicking on the "Add" button 3.) MAKE SURE TO FORMAT YOUR DOCUMENT FIRST SO THAT ALL CALCULATIONS ETC. ARE VISIBLE TO ME. IF NECESSARY SAVE ON MORE THAN ONE DOCUMENT. IF INFORMATION IS MISSING FROM YOUR DOCUMENT DUE TO POOR FORMATTING YOUR GRADE WILL BE ADJUSTED ACCORDINGLY. IT IS BEST TO DO A PRINT PREVIEW FIRST TO INSURE YOUR DOCUMENT LOOKS THE WAY YOU WANT IT TO LOOK BEFORE CONVERTING IT TO PDF. ASSIGNMENT REQUIREMENTS: 1.) Prepare the END of year INSIDE (TAX) BASIS balance sheet for the PARTNERSHIP for YEAR TWO. 2.) Prepare the END of year FINANCIAL STATEMENT (BOOK) BASIS balance sheet for the PARTNERSHIP for YEAR TWO. 3.) Calculate the OUTSIDE TAX BASIS for YEAR TWO for PARTNER A & B. Hint: Make sure to consider debt basis in your calculations. This activity consists of two tax years. Year one calculations will be completed in this module. Year two calculations will be completed in a later module. The calculations from year one are the starting point for year two so it is essential that you keep this assignment and save your calculations. You will need them for future assignments! YEAR ONE FACTS: Partner A B Asset Cash Land FMV $ 400,000 $ $ 400,000 $ $ 800,000 $ Pre-contribution Basis Gain 400,000 $ 230,000 $ 170,000 630,000 $ 170,000 Ownership Percentage 50% 50% 100% Partnership Operations Year One Assume net income is kept in the partnership to fund operations Ordinary Income Tax Exempt Income Charitable Contributions Capital Loss $ $ $ $ $ 648,000 2,200 (13,800) (3,300) 633,100 SUBMISSION GUIDELINES: 1.) Show all calculations. I will not review Excel formulas. You must show me your work by typing it out. This is because your paper will be submitted in PDF format, not Excel. 2.) You may prepare your work in Excel however you MUST format it and save it in PDF format before submitting it. To save an excel work-book in PDF do the following steps: - Click on the last tab of the top tool bar called "Acrobat" - Click on "Create PDF" - "Add" the "Sheets in Excel" to "Sheets in PDF" by clicking on the "Add" button 3.) MAKE SURE TO FORMAT YOUR DOCUMENT FIRST SO THAT ALL CALCULATIONS ETC. ARE VISIBLE TO ME. IF NECESSARY SAVE ON MORE THAN ONE DOCUMENT. IF INFORMATION IS MISSING FROM YOUR DOCUMENT DUE TO POOR FORMATTING YOUR GRADE WILL BE ADJUSTED ACCORDINGLY. IT IS BEST TO DO A PRINT PREVIEW FIRST TO INSURE YOUR DOCUMENT LOOKS THE WAY YOU WANT IT TO LOOK BEFORE CONVERTING IT TO PDF. ASSIGNMENT REQUIREMENTS: 1.) Prepare the BEGINNING of year INSIDE (TAX) BASIS balance sheet for the PARTNERSHIP for YEAR ONE. 2.) Prepare the END of year INSIDE (TAX) BASIS balance sheet for the PARTNERSHIP for YEAR ONE. 3.) Prepare the BEGINNING of year FINANCIAL STATEMENT (BOOK) BASIS balance sheet for the PARTNERSHIP for YEAR ONE. 4.) Prepare the END of year FINANCIAL STATEMENT (BOOK) BASIS balance sheet for the PARTNERSHIP for YEAR ONE. 5.) Calculate the OUTSIDE TAX BASIS for YEAR ONE for PARTNERS A & B. 6.) Calculate PARTNER B's pre-contribution gain in YEAR ONE (if any). Balance Sheet - Inside Basis of the Partnership Beginning of Year One BASIS ASSETS: Cash Land ASSETS 400,000 230,000 Partners' Outside Tax Basis Partner A - tax basis Partner B - tax basis 630,000 LIABILITIES & EQUITY 400,000 230,000 630,000 Balance Sheet - Financial Accounting Records Beginning of Year One FAIR MARKET VALUE ASSETS: Cash ASSETS 400,000 LIABILITIES & EQUITY Land 400,000 Equity: Capital - Partner A Capital - Partner B 800,000 400,000 400,000 800,000 Calculation of Partner's Outside Tax Basis Year One Total Partnership 630,000 Partner A 50% 400,000 Partner B 50% 230,000 Current Year Partnership Income: Ordinary Income Tax Exempt Income 648,000 2,200 324,000 1,100 324,000 1,100 Current Year Partnership Deductions: Charitable Contributions Capital Loss (13,800) (3,300) (6,900) (1,650) (6,900) (1,650) End of Year Outside Tax Basis 1,263,100 Net increase for partnership operations 716,550 316,550 546,550 316,550 Original Contribution 1,263,100 Balance Sheet - Inside Basis of the Partnership End of Year One BASIS ASSETS: Cash Land ASSETS 1,033,100 230,000 Partners' Outside Tax Basis Partner A Partner B 1,263,100 LIABILITIES & EQUITY 716,550 546,550 1,263,100 Should equal cumulative partners' outside basis above = Balance Sheet - Financial Accounting Records End of Year One FAIR MARKET VALUE ASSETS: Cash Land ASSETS 1,033,100 400,000 Equity: Capital - Partner A Capital - Partner B 1,433,100 LIABILITIES & EQUITY 716,550 716,550 1,433,100 1,263,100