Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year.
Question:
Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $118,000, and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $71,200 and was appraised at $188,000. The land was also encumbered with a $71,200 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $7,800 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information:
Sales revenue | $ 482,000 |
---|---|
Cost of goods sold | 416,400 |
Operating expenses | 76,400 |
Long-term capital gains | 2,520 |
§1231 gains | 900 |
Charitable contributions | 300 |
Municipal bond interest | 300 |
Salary paid as a guaranteed payment to Deanne (not included in expenses) | 3,000 |
Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver