Myself and three of my acquaintances, Ben, Charlie, and Diana have entered into ABCD partnership in January 2015. I contributed cash of $5,000 in exchange for 25% interest in the partnership. Ben contributed property with a fair market value of $5,000 a basis of $4,000 and liabilities of $800 in exchange for 25% interest. The partnership assumed the liabilities of Ben's property. Charlie contributed debt instruments valued at $5,000 which had built-in losses of $2,000 (so an adjusted basis of $7,000) in exchange for 25% interest. And finally Diana, who is a lawyer, contributed services valued at $5,000 in exchange for 25% interest. On 2/1/15 Charlie sold his 25% interest to me. 

What is the basis of the partnership interest for each of the four partners at the time immediately following contribution? List any gains or losses that need to be recognized by the partners or the partnership in relation to each of these contributions. 

What items will increase or decrease each partner's basis? 

Over the year the partnership made $20,000 in ordinary income and $3,000 LTCG. Which forms will I need to file for my 2015 partnership tax return? How much income will flow to each individual partner? How do you show these allocations on the partnership tax return?

Answer rating: 100% (QA)

Solution Basis of every partner in partnership 1 Allison 500... View the full answer