Question

On March 1, 2019, George and James form the GJ General Partnership in which they will share profits and losses equally. George contributes $600,000 in cash and James contributes land with an adjusted basis of $400,000 and a fair market value of $750,000. The land is subject to a qualified nonrecourse mortgage of $150,000.

**Required:**

- How much gain or loss will George, James and the partnership recognize upon the formation of the partnership?
- Determine each partner’s basis in his partnership interest.
- What is George’s at-risk basis?
- What is the partnership’s adjusted basis for the land?
- Determine the total outside basis for the partnership.
- If the partnership sells the land for $800,000 on May 31, 2020, how much gain will each partner report on his own tax return?

Answer #1

On March 1, 2019, George and James form the GJ General
Partnership in which they will share profits and losses equally.
George contributes $600,000 in cash and James contributes land with
an adjusted basis of $400,000 and a fair market value of $750,000.
The land is subject to a qualified nonrecourse mortgage of
$150,000.
Required:
a. How much gain or loss will George, James and the
partnership recognize upon the formation of the partnership?
b. Determine each partner’s basis in...

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property with an adjusted basis of $500,000 and a fair market value
of $950,000. The property is subject to a $200,000 liability, which
is also transferred into the partnership and is shared equally by
the partners for basis purposes. George and James share in all
partnership profits equally except for any precontribution gain,
which must be allocated according to the statutory rules for
built-in...

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contributes $600,000 cash and James contributes non-depreciable
property with an adjusted basis of $500,000 and a fair market value
of $950,000. The property is subject to a $200,000 liability, which
is also transferred into the partnership and is shared equally by
the partners for basis purposes. George and James share in all
partnership profits equally except for any pre-contribution gain,
which must be allocated according to the statutory rules for
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Partners A and B form a partnership where each receive a 50%
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A.
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