The partnership receives a 45000 deduction which will

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The partnership receives a $45,000 deduction which will be allocated equally among X,Y & Z. Each partner will receive $15,000 (45,000/3) deduction. Basis of the real estate = $135,000 [(120,000 x 0.75)+45,000]. Assets Tax Basis FMV Real estate $135,000 $180,000 Liabilities $0 $0 Capital X (40-15+5) $30,000 $45,000 Y $30,000 $45,000 Z $30,000 $45,000 ©2015 CCH Incorporated. All Rights Reserved.
Practical Guide to Partnerships and LLCs—Instructor’s Guide Problems 3 Q $45,000 $45,000 $135,000 $180,000 If the property is later sold for $180,000, the partnership will receive a gain of $45,000 (180,000-135,000). The gain will be allocated equally to the X,Y,Z. X,Y, & Z will each receive a gain of $15,000 (45000/3). Q will not recognize a gain or a loss because his share of the basis in the property is $45,000 and his share of the sales price is $45,000. If the property is later sold for $200,000, the partnership will recognize a $65,000 gain. This gain will be allocated among the partners. X, Y, & Z will each receive $20,000 gain [(200,000/4)-(135,000/3)]. Q would recognize a $5,000 [(200,000/4)-45,000]. What would your answer to the above questions be under the Proposed Regulations? Under the proposed regulations, Q would recognize a guaranteed payment of $45,000 and would have a basis in her partnership interest of $45,000. Q would immediately start recognizing allocations of partnership income and loss. If the partnership is immediately vested, the partnership would immediately have a deduction of $45,000 for the guaranteed payment, or $15,000 deduction each for X, Y, & Z. The partnership would not recognize any gain or loss. The partnership could qualify for the safe harbor provision. Q could recognize compensation compensation income on the date of transfer equal to the liquidation value of the interest. If the safe harbor is elected, the partnership will be entitled to a deduction equal to the amount included as compensation by Q. ©2015 CCH Incorporated. All Rights Reserved.
Practical Guide to Partnerships and LLCs—Instructor’s Guide Problems 4 7. The XYZ partnership has the following balance sheet: Assets Tax Basis FMV Real estate $300,000 $210,000

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