Question

Partners A and B form a partnership where each receive a 50% interest in capital and...

Partners A and B form a partnership where each receive a 50% interest in capital and profits. Partner A contributes cash of $25,000 and land valued at $25,000. Partner A has a basis in the land of $20,000 and has held it for two years. Partner B contributes equipment (with a basis to B of $15,000 and a fair market value of $30,000) and inventory (with a basis to B of $10,000 and a fair market value of $20,000). Partner B would recognize Section 1245 gain of $15,000 on the hypothetical sale of the equipment to a third party at the time of contribution after having depreciated it for several years. What is A’s holding period in A’s partnership interest?

A.

Partner A is allowed a tacked holding period for 50% the interest attributable to the fair market value of land contributed and may therefore treat it as having been held long-term. The holding period attributable to the remaining 50% of A’s interest begins the day following A’s contribution of money to the partnership.

B.

Partner A is allowed a tacked holding period for 40% the interest attributable to A’s basis in the land contributed and may therefore treat it as having been held long-term. The holding period attributable to the remaining 60% of A’s interest begins the day following A’s contribution of both money and land with a net unrealized gain to the partnership.

C.

Partner A’s holding period in the partnership interest begins the day after A contributes the money and land to the partnership.

D.

Partner A assumes a long term holding period in the partnership interest attributable to the contributed land because contributions of money are disregarded for this purpose.

Homework Answers

Answer #1

Option A. Partner A is allowed a tacked holding period for 50% the interest attributable to the fair market value of land contributed and may therefore treat it as having been held long-term. The holding period attributable to the remaining 50% of A’s interest begins the day following A’s contribution of money to the partnership

Percentage of share for which the assets are contributed are important but not the basis of the contribution after contribution has made.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Partners A and B form a partnership where each receive a 50% interest in capital and...
Partners A and B form a partnership where each receive a 50% interest in capital and profits. Partner A contributes cash of $25,000 and land valued at $25,000. Partner A has a basis in the land of $20,000 and has held it for two years. Partner B contributes equipment (with a basis to B of $15,000 and a fair market value of $30,000) and inventory (with a basis to B of $10,000 and a fair market value of $20,000). Partner...
Partners A and B form a partnership where each receive a 50% interest in capital and...
Partners A and B form a partnership where each receive a 50% interest in capital and profits. Partner A contributes cash of $25,000 and land valued at $25,000. Partner A has a basis in the land of $20,000 and has held it for two years. Partner B contributes equipment (with a basis to B of $15,000 and a fair market value of $30,000) and inventory (with a basis to B of $10,000 and a fair market value of $20,000). Partner...
Partners A and B form a partnership where each receive a 50% interest in capital and...
Partners A and B form a partnership where each receive a 50% interest in capital and profits. Partner A contributes cash of $25,000 and land valued at $25,000. Partner A has a basis in the land of $20,000 and has held it for two years. Partner B contributes equipment (with a basis to B of $15,000 and a fair market value of $30,000) and inventory (with a basis to B of $10,000 and a fair market value of $20,000). Partner...
A, B, C, & D (all individuals) form a general partnership in which they each have...
A, B, C, & D (all individuals) form a general partnership in which they each have an equal interest in capital and profits. All the partners and the partnership are cash method taxpayers. In exchange for their respective partnership interest, each partner transfers the following assets, all of which have been held more than 2 years. PartnerAssetsAdjusted BasisFair Market Value ALand $30,000$70,000 Goodwill$0$30,000 BEquipment(S 1245 gain) $25,000$45,000 Installment note from The sale of land $20,000$25,000 Inventory$5,000$30,000 CBuilding$25,000$60,000 Land$25,000$10,000 Receivables for...
Three Partners Chris, Joe, and Harry form a partnership with Chris and Joe are general partners...
Three Partners Chris, Joe, and Harry form a partnership with Chris and Joe are general partners with each have a 40% interest, and Harry is a limited partner with a 20% interest (assume they satisfy the tests for substantial economic effect under Section 704(b)). Chris contributes $10,000, Joe contributes $20,000, and Harry contributes $40,000. The partnership borrows $30,000 on a recourse basis and uses the proceeds, along with each partner’s cash contributions, to purchase land for $100,000. What is each...
Fred contributes cash of $350,000 to Strumble Partnership for his 50% interest in the partnership. For...
Fred contributes cash of $350,000 to Strumble Partnership for his 50% interest in the partnership. For his 50% interest, Gary contributes a building with a fair market value of $550,000 and a basis of $250,000. The building is subject to a mortgage of $200,000. Net income for Strumble for 2019 is $100,000, Strumble borrows an additional $50,000 during 2019 and makes a distribution to each partner of $20,000. Assuming that the partners share profits and losses equally what is Gary's...
Jim and Angie form the JAZ partnership with Zoe by contributing $75,000 each to partnership equity....
Jim and Angie form the JAZ partnership with Zoe by contributing $75,000 each to partnership equity. Zoe, the third partner, contributes property with a basis of $50,000 and fair market value of $75,000. The three are equal partners in the partnership. Determine the tax consequences to Zoe for the contribution of property to the partnership. What are the partnership’s tax consequences? What is each partner’s basis in the partnership interest? What is the partnership’s basis in the property?
32. The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned...
32. The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned by that partner was $40,000 on the first day of last year. The partnership reported net income for last year of $80,000 (there were no separately stated items to take into account). The partnership distributed pro rata to each partner $55,000 in cash plus identical parcels of land that each had a fair market value of $25,000 and a basis to the partnership of...
Partner A contributed land (basis $40,000, fmv $50,000) for interest in partnership; B contributed services (fmv...
Partner A contributed land (basis $40,000, fmv $50,000) for interest in partnership; B contributed services (fmv $50,000). What is each partner’s basis in partnership and partnership’s basis in land? Explain. How would this change if the partnership borrowed $40,000?
3. On January 1 of the current year, Anna and Jason form an equal partnership. Anna...
3. On January 1 of the current year, Anna and Jason form an equal partnership. Anna contributes $50,000 cash and a parcel of land (adjusted basis of $200,000; fair market value of $150,000) in exchange for her interest in the partnership. Jason contributes property (adjusted basis of $180,000; fair market value of $200,000) in exchange for his partnership interest. Which of the following statements is true concerning the income tax results of this partnership formation? a. Jason recognizes a $20,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT