Bridget, Courtney, and Jack combine to form Crestwood Partnership. The total FMV of Crestwood Partnership at...

 

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Bridget, Courtney, and Jack combine to form Crestwood Partnership. The total FMV of Crestwood Partnership at the date of formation was $220,000. Bridget transfers land worth $110,000 and with a basis of $70,000 for 50% of Crestwood partnership interest (FMV $110,000). . Courtney transfers machinery with a fair market value of $86,000 and a non-recourse business-purpose loan of $20,000 for 30% of Crestwood partnership interest (FMV $66,000). The adjusted basis of machinery was $30,000. Jack, a CPA and lawyer, provided accounting and legal services worth $44,000 in exchange for 20% capital interest in Crestwood (FMV $44,000). Profits are shared 50%/30 % / 20% by Bridget, Courtney, and Jack respectively. Bridget is a general partner and is responsible for the daily operations of the partnership. Courtney and Jack are limited partners and are not involved in the daily operations of the partnership. a) What is Bridget's realized gain/loss from the formation of the partnership? (6 points) b) What is Courtney's outside basis immediately after the formation of the partnership? (6 points) c) How much gross income will Jack report on his tax return as a result of the formation of the partnership? (6 points) d) How much of the $44,000 of accounting and legal services contributed by Jack is allocated to Bridget? (6 points) e) In the fourth year, Crestwood sells the land originally contributed by Bridget. The sales price for the land was $150,000. How much of the gain/loss is allocated to Bridget? (6 points) Bridget, Courtney, and Jack combine to form Crestwood Partnership. The total FMV of Crestwood Partnership at the date of formation was $220,000. Bridget transfers land worth $110,000 and with a basis of $70,000 for 50% of Crestwood partnership interest (FMV $110,000). . Courtney transfers machinery with a fair market value of $86,000 and a non-recourse business-purpose loan of $20,000 for 30% of Crestwood partnership interest (FMV $66,000). The adjusted basis of machinery was $30,000. Jack, a CPA and lawyer, provided accounting and legal services worth $44,000 in exchange for 20% capital interest in Crestwood (FMV $44,000). Profits are shared 50%/30 % / 20% by Bridget, Courtney, and Jack respectively. Bridget is a general partner and is responsible for the daily operations of the partnership. Courtney and Jack are limited partners and are not involved in the daily operations of the partnership. a) What is Bridget's realized gain/loss from the formation of the partnership? (6 points) b) What is Courtney's outside basis immediately after the formation of the partnership? (6 points) c) How much gross income will Jack report on his tax return as a result of the formation of the partnership? (6 points) d) How much of the $44,000 of accounting and legal services contributed by Jack is allocated to Bridget? (6 points) e) In the fourth year, Crestwood sells the land originally contributed by Bridget. The sales price for the land was $150,000. How much of the gain/loss is allocated to Bridget? (6 points)

Answer rating: 100% (QA)

a Bridgets realized gainloss from the formation of the partnership can be calculated as the differen... View the full answer