On July 1, the ABC Partnership, a calendar-year partnership, distributes to each of its equal partners $10,000
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- On July 1, the ABC Partnership, a calendar-year partnership, distributes to each of its equal partners $10,000 cash and land with a value of $10,000 and a basis of $5,000. A, B and C have outside bases of $20,000, $10,000 and $5,000 respectively. The partnership has the following assets prior to the distribution:
Assets A.B. F.M.V.
Cash $50,000 $50,000
Accounts Receivable 0 20,000
Inventory 20,000 30,000
Land 30,000 60,000
Building 10,000 50,000
- Discuss the tax consequences of the distribution to A, B, and C, each of whom has owned his partnership interest for several years.
- What result to C if he receives the land first and the cash in a subsequent separate distribution on October 1?
- What result to C in (b), above, if the cash distribution on October 1 is a draw against his share of partnership income, which is $20,000 for the year?
Related Book For
Essentials of Accounting for Governmental and Not-for-Profit Organizations
ISBN: 978-0073527055
10th Edition
Authors: Paul A. Copley
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