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ACCT $540$ A$7$

Partnership Formations Problem

NOTE THAT THIS IS IDENTICAL TO ASSIGNMENT $4$ EXCEPT THIS IS A PARTNERSHIP

Mary and Todd form the MT Partnership, with a transfer of the following properties:

Mary $$3,600,000$ cash

Todd $$3,600,000$ FMV property

$$1,600,000$ tax basis

Mary will receive $50\%$ and Todd $50\%$ of the capital, profits, and losses of the partnership.

Complete the following

Mary Todd

Realized gain $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Recognized gain $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Basis of PS Interest $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

MT basis in contributed asset $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

VARIATION $1$: Return to original facts $($same basis$).$ Todd$$s property is valued at $$4,600,000$ but is

contributed subject to a $$1,000,000$ liability. $($This means that Todd still contributes equity of

$$3,600,000$ so it is still a $50/50$ split of ownership.$)$ Assume that under the partnership debt sharing

rules that each partner$$s share of the liability is $50\%.$

Complete the following

Mary Todd

Realized gain $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Recognized gain $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Basis of PS Interest $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

MT basis in contributed asset $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

VARIATION $2$: Same as Variation $1($same basis$)$ except Todd$$s property is valued at $$5,600,000$ and is

contributed subject to a liability of $$2,000,000.($Again Todd contributes $$3,600,000$ of equity$).$ Assume

that under the partnership debt sharing rules that each partner$$s share of the liability is $50\%.$

Complete the following

Mary Todd

Realized gain $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Recognized gain $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Basis of PS Interest $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

MT basis in contributed asset $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$