Daisy Tree Partnership owns and operates two apartment complexes in the metropolitan area. The first complex was contributed to the partnership by partner L. The other two partners (M and N) contributed cash which, together with borrowed funds, was used to purchase the second complex. The three partners share partnership income, loss, gain and deduction equally. The tax basis and book value of the partnership’s assets at the end of the current year are as follows:

	Tax	Book
Cash and equivalents	$60,000	$60,000
Receivables	0	45,000
Apartment Complex 1	600,000	1,500,000
Accumulated depreciation, complex 1	(120,000)	(300,000)
Apartment Complex 2	2,475,000	2,475,000
Accumulated depreciation, complex 2	(180,000)	(180,000)
Land and other assets	200,000	200,000
Total assets	$2,035,000	$4,070,000

A.   Assume that the partnership uses the traditional method with curative allocations to make allocations under Code Sec. 704(c). Further assume that complex 1 has a remaining useful life of 10 years (use 10 years for book) for book and tax. Complex 2 has a remaining useful life of 27.5 years (use 27.5 years for book). Both are depreciated using the straight line method for both book and tax. Show how book and tax depreciation will be allocated among the partners.

Answer rating: 100% (QA)

Answer Value in dollar Particulars Tax Value Book Value Difference Cash Equiv... View the full answer