The KJA partnership is formed by Kennedy, Jane, and Allyson. Kennedy will contribute $ 5 0 0
Fantastic news! We've Found the answer you've been seeking!
Question:
The KJA partnership is formed by Kennedy, Jane, and Allyson. Kennedy will contribute $ cash as will Jane.
Allyson will contribute real property with a FMV of $ and subject to a nonrecourse debt of $ This property has a basis of $ to Allyson at the date of contribution. A tax basis balance sheet is then:
Cash
Property
NR Debt
Kennedy capital
Jane capital
Allyson capital
After formation the partnership will borrow from a bank to fund development. The partnership borrows $ from the bank. Kennedy will pledge land that she owns outside of the partnership as security for this loan. That land has a FMV of $ at the date of the pledge. Jane will personally guarantee the debt. Neither Kennedy nor Allyson are involved in the guarantee.
At the end of the year the balance sheet is as follows no activity has taken place other than the contribution and the loan:
Cash
Property
NR Debt
Bank Debt
Kennedy capital
Jane capital
Allyson capital
Show how the partners shares of the debt will be determined and classified on the K forms.
Related Book For
Fundamentals Of Taxation 2015
ISBN: 9781259293092
8th Edition
Authors: Ana Cruz, Michael Deschamps, Frederick Niswander, Debra Prendergast, Dan Schisler, Jinhee Trone
Posted Date: