ch3 & 4 - Problem set STU(1) - Chapters 3 4 Problem Set PS 4#1 Services C is offered a capital interest in AB partnership whose sole asset is land

ch3 & 4 - Problem set STU(1) - Chapters 3 4 Problem Set PS...

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Chapters 3 & 4 Problem Set PS # & 4 - #1 ServicesC is offered a capital interest in AB partnership whose sole asset is land with a value of $150,000 and an adjusted basis of $90,000. A and B each have an adjusted basis of $45,000. C has performed services for the partnership in the past and has agreed to perform services in the future. We are not following the proposed regulations.1.Describe the tax consequences if C receives a 10% capital interest as compensation for his services over this past year.2.Describe in general the tax consequences if C received a capital interest as compensation for services performed in connection with the formation of the partnership and we are not following the proposed regulations. 3.Describe the tax consequences if C receives a 10% capital interest as compensation for his services to be performed over the next three years provided C must relinquish the interest if he ceases to render services before the end of the third year. The land is estimated to have a value of $450,000 at the end of year 3.4. Describe the tax consequences if AB transfers to C a non-forfeitable 30% interest in the future profitsof thepartnership as compensation for his services over the past year.PS 3 & 4 # 2 – Services IIThe XYZ partnership has the following balance sheet:AssetsTax BasisFMVReal estate$120,000$180,000Liabilities$0$0CapitalX$40,000$60,000Y$40,000$60,000Z$40,000$60,000$120,000$180,000a.If Q provides $45,000 of services in exchange for a $25% interest in the partnership, what is the tax effect to Q, X, Y, Z, and XYZ? Assume all of the partners are individuals and we are not following the proposed regulations. How much income does Q recognize? How much gain do X, Y, and Z recognize? How much of a deduction do they get? What basis will XYZ have in the Real estate? What is the balance sheet afterward? If the property is later sold for $180,000, how much gain will each partner recognize? What if it is later sold for $200,000?b.What would your answer to the above questions be under the Proposed Regulations?PS 3 & 4 - #3 Guaranteed paymentE is a partner in partnership EF and is entitled to receive 40% of partnership income but not less than $90,000. This year EF reported $150,000 of taxable income (before any guaranteed payment). The income consists of $110,000 ofordinary income and $40,000 of long-term gain.1.What is E’s guaranteed payment? Explain.2.What amount and type of partnership income must F (the remaining partner) report this year? Explain.
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PS 3 & 4 - #4 – Guarantees
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  • Summer '16
  • Ndamukong Tangeh
  • Business, Interest, The Land, Limited partnership, partner, Taylor Partnership

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