The ABC partnership has three equal partners, A, B, and C, and the following balance sheet: Assets
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Question:
The ABC partnership has three equal partners, A, B, and C, and the following balance sheet:
| Assets | Partner's Capital | ||||
|---|---|---|---|---|---|
| Adj. Basis | FMV | Adj. Basis | FMV | ||
| Cash | 60,000 | 60,000 | A | 70,000 | 80,000 |
| Cap Asset 1 | 90,000 | 60,000 | B | 70,000 | 80,000 |
| Cap Asset 2 | 40,000 | 60,000 | C | 70,000 | 80,000 |
| Cap Asset 3 | 20,000 | 60,000 | |||
| 210,000 | 240,000 | 210,000 | 240,000 |
A receives capital asset #1 in an operating distribution. A has a one-ninth interest worth $20,000 in the partnership capital and profits after the distribution.
(a) What results to A and the partnership if there is no §754 election? Reconstruct the balance sheet after the distribution.
(b) What results to A and the partnership if the partnership has made a §754 election? Reconstruct the balance sheet after the distribution.
(c) How should any basis adjustment be allocated among the partners?
Expert Answer:
a Without a 754 election When A receives capital asset 1 in an operating distribution the partnershi... View the full answer
Related Book For 
Calculus Early Transcendentals
ISBN: 978-0321947345
2nd edition
Authors: William L. Briggs, Lyle Cochran, Bernard Gillett
Posted Date:
