YEAR ONE

FACTS:

Partner Asset FMV Basis Ownership Percentage

A Cash $400,000 $400,000 50%

B Land $400,000 $230,000 50%

$800,000 $630,000 100%

Partnership Operations Year One

Assume net income is kept in the partnership to fund operations

Ordinary Income $648,000

Tax Exempt Income $2,200

Charitable Contributions $(13,800)

Capital Loss $(3,300)

$ 633,100

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).

*Show all calculations.