4. X owns a farm tractor that he purchased for $100,000. Over his years of use, he took depreciation deductions totaling $60,000. Because he bought it on credit, H still owes the bank $15,000 on the $85,000 loan that made it possible to buy the tractor. Y had undeveloped land that he inherited from his father. Y’s father purchased the property for $42,000 many years ago. The land was worth $149,000 when Y got it and it is now worth $171,000. X and Y now form a business together. The first thing they do together is to borrow $90,000 from  a bank. From this money, Y takes $20,000 because Y’s land is worth more than H’s tractor, and this will make them equal partners they figure. In their first year of operation, the business makes $74,000 and neither X or Y pull any of it out of the business.
sewer the following with numerical amounts (14 points):

 

X’s basis in the tractor immediately before joining the business__________________________

Y’s basis in the land immediately before joining the business__________________________

Assuming this is a partnership, X’s basis in the business immediately after formation __________________________

Assuming this is a partnership, Y’s basis in the business immediately after formation __________________________

Assuming this is a S Corporation, X’s basis in the business immediately after formation __________________________

Assuming this is a S Corporation, Y’s basis in the business immediately after formation __________________________

Assuming X’s initial basis was $100,000, X’s basis in the business at the end of the first year of operation___________________

Assuming Y’s initial basis was $100,000, Y’s basis in the business at the end of the first year of operation___________________

X’s total taxable income based on all these facts_________________________

Y’s total taxable income based on all these facts_________________________

Answer rating: 100% (QA)

1 X basis in tractor 10000060000 depreciation 40000 Basis is the amount d... View the full answer