Question 1 Part A: Abe and Betty formed the AB general partnership. The partnership agreement provides...

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Question 1 Part A: Abe and Betty formed the AB general partnership. The partnership agreement provides that A and B share all items of partnership income and loss equally. A contributed $10,000 cash and B contributed property with a basis of $8,000 and a fair market value of $16,000. The property was subject to a $6,000 recourse liability which was assumed by the partnership. What is Abe and Betty's initial basis in their partnership interest (outside basis)? Clearly show your work and explain your answer Part B: In year 1 the only item of income or loss the partnership reported was ordinary income of $4,000. In addition, the partnership distributed $3,000 to Abe and $1,000 to Betty. What is Abe and Betty's basis in their partnership interest (outside basis) at the end of year 1? Clearly show your work and explain your answer. Question 2 A and B each contribute $500 cash to the equal AB general partnership. The partnership purchase an asset worth $10,000 by paying $1,000 cash and taking the asset subject to a $9,000 nonrecourse liability payable in full after five years. The partnership agreement provides that A is allocated all depreciation with respect to this asset for the first four years, followed by an equal split over the remaining life of the asset. All other items of profit and loss are shared equally. The asset is depreciated on a straight-line basis over 20 years (at a rate of $500 per year). There are no other partnership liabilities. Required: What are A and B's share of partnership liabilities at the end of Years 1, 2, and 37 Clearly show your work and label your answer for each year. Question 1 Part A: Abe and Betty formed the AB general partnership. The partnership agreement provides that A and B share all items of partnership income and loss equally. A contributed $10,000 cash and B contributed property with a basis of $8,000 and a fair market value of $16,000. The property was subject to a $6,000 recourse liability which was assumed by the partnership. What is Abe and Betty's initial basis in their partnership interest (outside basis)? Clearly show your work and explain your answer Part B: In year 1 the only item of income or loss the partnership reported was ordinary income of $4,000. In addition, the partnership distributed $3,000 to Abe and $1,000 to Betty. What is Abe and Betty's basis in their partnership interest (outside basis) at the end of year 1? Clearly show your work and explain your answer. Question 2 A and B each contribute $500 cash to the equal AB general partnership. The partnership purchase an asset worth $10,000 by paying $1,000 cash and taking the asset subject to a $9,000 nonrecourse liability payable in full after five years. The partnership agreement provides that A is allocated all depreciation with respect to this asset for the first four years, followed by an equal split over the remaining life of the asset. All other items of profit and loss are shared equally. The asset is depreciated on a straight-line basis over 20 years (at a rate of $500 per year). There are no other partnership liabilities. Required: What are A and B's share of partnership liabilities at the end of Years 1, 2, and 37 Clearly show your work and label your answer for each year.

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Question 1 Part A To calculate Abe and Bettys initial basis in their partnership interest outside basis we need to consider the contributions made and ... View the full answer