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A, B and C share profit and losses equally...




A, B and C share profit and losses equally Basis FMV Cash $21,000 $21,000 Accounts receivable $0 $24,000 Equipment $45,000 $60,000 Building $12,000 $42,000 Land $9,000 $36,000 Goodwill 0 $117,000 $87,000 $300,000 Current Liabilities $45,000 A $14,000 B $14,000 C $14,000 $87,000 D entered the above partnership and received a 20% interest in capital and profits and losses. a. What should be D?s capital contribution based on the fair market value of the assets and the amount of the liabilities? b. Assume that D became a member of the partnership following his capital contribution and then the partnership collected the $24,000 in accounts receivable. What should be done in regard to the income from these accounts receivable? c. Assume D did not enter the partnership. C left the partnership and received the land, building and $7,000 cash in liquidation of his interest in the partnership. i. What is C?s recognized gain and the character of that gain? Show your calculations. ii. What is C?s total basis in the land and building? Show your calculations. d. Assume D did not enter the partnership but the partnership changed the P&L ratios, increasing C?s share to 50%, and reducing A?s share from 1/3rd to 1/6th. What are the immediate tax consequences to the partners of the change in the P&L ratios on A and C?


Paper#6473 | Written in 18-Jul-2015

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