Question

Caitlin, Robyn, and Hailee formed CR&H, a general partnership, as equal partners. Caitlin contributed $50,000 cash. Robyn contributed $20,000 cash and property with an adjusted basis of $20,000 and a FMV of $30,000. Hailee contributed property with an adjusted basis of $38,000 and a FMV of $50,000. The partnership had $60,000 in ordinary income for the year. What is Robyn's ending tax capital account?

$40,000

$50,000

$60,000

$70,000

Answer 1

Solution:

The correct answer is $70,000

Partner's Contrybution of assets to the partnership are recorded at FMV of assets, So to tal capital contrybution of Robyn is $20,000 + $30,000 = $50,000

and Ordinary income of partnership firm is allocated among the partners in equal ration as they are equal partners.

So $60,000/3 = $20,000 will be added to the capital contrybution of Robyn

So Robyn's ending tax capital is $50,000+$20,000 = $70,000.

Please upvote , if found the answer useful.
For any clarification, Feel free to reach at comment Section