Mirza_Assignment 7 - Ayesha Afzal Mirza Federal Income...

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Ayesha Afzal Mirza Federal Income Taxation FALB09 - Sec A Instructor: Joseph Poletti Assignment 7
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Chapter 11 13. a. Cash beginning of year = $120,000 Share of EG’s debt = $80,000 × ½= 40,000 Erica’s basis, beginning of year =$160,000 b. Cash beginning of year = $120,000 Add: Taxable income = $70,000 Tax-exempt interest income = 1,000 § 1231 gain = 2,000 Long-term capital gain = 500 Total = 73,500 $193,500 Less: Short-term capital loss = $ 1,500 Political contribution = 500 Charitable contribution = 1,000 Payment of Erica’s medical expenses = 4,000 Cash distribution to Erica = 10,000 Total = (17,000) $176,500 Plus: Share of EG’s debt = $100,000 × ½ = 50,000 Erica’s basis, end of year = $226,500 14. a. Carols gain on land = $20,000 Gain on equipment = $60,000 The partnership realizes a gain equal to the value of the property it receives (it has a $0 basis in the partnership interests it issues).
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b. Neither the partnership nor either of the partners recognizes any gain on formation of the entity. c. Carol’s substituted basis of $70,000 = 30,000 + $40,000. Connie will take a substituted basis of $30,000 in her partnership interest ($30,000 basis in the equipment). d. Partnership Carryover Basis = $30,000 basis in cash, $40,000 basis in land, and $30,000 basis in equipment. e.
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This note was uploaded on 02/23/2010 for the course ACCT 234849 taught by Professor Don during the Spring '10 term at University of Houston.

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Mirza_Assignment 7 - Ayesha Afzal Mirza Federal Income...

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