TAX 9863 Study Guide - Final Guide: Internal Revenue Code

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scarletsnail973

14 Feb 2020

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Document Summary

Jerry contributes a building with a tax basis and a fair market value and inventory (in jerry"s hands) with a tax basis and a fair market value. Elaine contributes land with a tax basis and an fair market value and of cash. Jerry purchased the building four months prior to the formation of the partnership. The partnership spends of its cash on legal and filing fees for organizing the partnership. No gain is recognized upon the formation of the partnership according to section. This section discusses the nonrecognition rule which states, except in the case of certain investment partnerships, S721 protects both the partnership and its partners from recognizing any gain or loss on the transfer of property to a partnership in exchange for an interest in the partnership. According to section 723, the partnership takes a transferred basis in the contributed property equal to that of the contributing partner.

Related Questions

Mike and Melissa form the equal MM Partnership. Melissa contributes the assets of her sole proprietorship (value of $140,000, adjusted basis of $115,000). Mike sells his land (fair market value of $100,000, adjusted basis of $120,000) to a third party for $100,000 and then contributes that cash as well as an additional $40,000 to the partnership. The partnership locates equivalent land that it purchases for $110,000.

How do these changes affect the tax and economic result for Mike and the partnership?

Mike has a realized loss of $______ on the sale of the land of which $_____ is recognized. Mike recognizes no gain or loss on his contribution to the partnership and has a basis of $_____ in his partnership interest. The partnership incurs a $_____ economic cost when it purchases equivalent land instead of receiving the land as a contribution from Mike.

emeraldpanda983

Mother nature and spirit world form the earth partnership.Mother nature contributes assets with a fair market value of$1,750,000 and an adjusted basis of $400,00 for 60 percent interestint he partnership. the assets are subject to a liability of$1,200,000. spirit world contributes cash of $20,000 for her 40percent interest in the partnership.

A.) how much gain is recognized by mother nature?

B.) how much liability is allocable to spirit world?

C.) How much gain is recognized by spirit world for theconributed cash?