C12-Chp-10-2-Homework-Prb-Partnerships

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ba4fca95ee9f0034e8b3f0e59b149d108bd197b8.doc. Page 1 of 8 First Name Last Name: Home work-Chapter 10. Turn in one copy of your solutions at the start of class. (42 @ 2.5 Pts. = 105) 1 [Pg. 9, Sec. 351, Sec. 721] For both corporations and partnerships, there are tax rules that provide for tax-free transfer of assets to a business in exchange for an ownership interest. How do the corporate rules and the partnership rules compare regarding: (1) minimum ownership requirements after the investment and (2) recognition of gain where debt assumed by the entity exceeds the investor’s basis in the property prior to the investment? Ownership requirement is greater Amount of gain recognized is greater a. for corporation for partnership b. for partnership for partnership c. for corporation for corporation d. for partnership for corporation 1 Differentiate between general and limited partnerships. 2 Explain the tax results of a contribution of property or services in exchange for a partnership interest. Forming a Partnership. You may want to take a look at the PowerPoint slides for Bob, starting with slide no. 28. 2 [Pg. 9, Sec. 722, C 11 -Chp -10 -7-Ptshp-Invest-Assets-Basis-Reg 1-722-1.xls] Peggy contributed property to a new partnership in return for a 40% interest in capital and profits. The property had a fair market value of $10,000, an adjusted basis of $6,000, and was subject to a $9,000 mortgage which was assumed by the partnership. What was Peggy’s recognized gain? a. $0 b. $2,000 c. $4,000 d. $6,000 e. Other 3 [Pg. 12. Sec. 722] Repeat the preceding question. What was Peggy's basis in the partnership as a result of this contribution? 4 [PowerPoint slides] Paul contributed property to a partnership in return for a 30% interest in capital and profits. The property had a fair market value of $10,000, an adjusted basis of $6,000, and was subject to a $9,000 mortgage which was assumed by the partnership. What was Paul’s recognized gain? 5 Ann acquired land in 2004 for $60,000. On 12-31-2011, Ann joined her college classmates (Betty and Carol) in a new partnership (ABC Partnership) to build luxury homes in Charlotte. Ann contributed the land, which currently had a value of $100,000 to the partnership and received a 20% interest in the partnership. There is no debt on the land. The other partners contributed assets having a total value of $400,000 ($200,000 from Betty and $200,000 from Carol). No debt was transferred to the partnership. Ann’s partnership interest has a value of $100,000.
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