The XYZ partnership has been operating for several years. All of its assets were purchased by the
Question:
The XYZ partnership has been operating for several years. All of its assets were purchased by the partnership, and at the end of the current year it’s balance sheet, which has been expanded to show the current fair market value of assets and capital, is as follows:
Assets | Liabilities & Capital | |||
AB/Book | FMV | Liabilities | ||
Cash | $600 | $600 | None | |
Accts. Rec. | 0 | 200 | ||
Equipment | 100 | 200 | ||
Stock | 500 | 1000 | ||
Land | 300 | 1000 | ||
Total | $1500 | $3000 | ||
Capital Accounts | ||||
Tax/Book | FMV | |||
X | $500 | $1000 | ||
Y | 500 | 1000 | ||
Z | 500 | 1000 | ||
$1500 | $3000 |
On the last day of the current year, W joins the partnership. In exchange for a contribution of $1000 cash, she receives a 25% interest in partnership profits, losses, and capital.?
Reconstruct the balance sheet of the partnership following W’s admission to the partnership, assuming, in the alternative?
The partnership does not elect to revalue its assets under § 1.704- 1(b)(2)(iv)(f), or
The partnership does elect to revalue its assets under the regulations.?
If W had purchased X’s interest in the partnership instead of acquiring an interest through a contribution to the partnership, would the partnership be permitted to revalue its assets under the regulations? Why or why not?
Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver