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Home work-Chapter 9
Barbara earns a salary from Big Corporation of $100,000 per year.
On 1-1-2011, she invested $30,000 to become a 25% partner in a partnership that owns rental property.
In 2011, the partnership had revenue of $90,000 and expenses of $50,000. No salary or guaranteed
payment was made to any partner. Barbara did withdraw $4,000 from the partnership in 2011. What is
Barbara’s basis in her partnership interest at the end of 2011, after taking into account all information
On 1-2-11, a company bought a warehouse and land, paying cash of $100,000 and giving a mortgage of
$400,000. The company paid back taxes of $5,000 that had accrued for 2010, and will pay $5,000 for
taxes that will be due for 2011.
What is the total basis of the warehouse and land?
David pays $35,000 cash and issues a mortgage note for $95,000 to purchase land.
He pays $750 to his attorney for reviewing the purchase agreement. David's initial basis in the land is
$ - 0 -
Carol is the business manager for Greenville Auto Mart. She buys a new car from the dealership for
$30,000. The basis of the car to the dealership was $25,000, and the fair market value is $42,000.
Greenville Auto Mart has a sales policy of posting the price of vehicles and not negotiating sales
discounts with customers. What is Carol's basis in the new car?
$ - 0 -
Harold purchases land and a building by paying cash of $35,000, and assuming the seller's $82,000
mortgage. In addition, Harold pays $3,000 of legal fees related to the purchase. For property tax purposes,
the land is valued at $17,000 and the building at $34,000. Harold's basis in the building is
Bill and Dorothy purchase a new residence on April 30, 2011. Bill and Dorothy pay the full amount of