27) ENot only do partnerships make the majority ofelections, but also the character of gains andlosses is determined at the partnership level.Additionally, a partnership is considered aflow-through entityand only filesinformation returns.28) BA partner's outside basis consists of the basisof the contributed property less any debt reliefthe property received plus the portion of debtthe partner assumes based upon the partner'sinterest in the partnership. In this case, thenonrecoursemortgage isallocated to thepartners strictlyaccording to theirVersion 186
profit-sharing ratios because the mortgagedoes not exceed the basis in the contributedproperty [$15,000 −$9,000 + ($9,000 ×33%)].29) BA partner's outside basis consists of the basisof the contributed property less any debt reliefthe property received plus the portion of debtthe partner assumes based upon the partner'sinterest in the partnership. In this case, thenonrecourse mortgage is allocated to thepartners strictly according to their profit-sharing ratios because the mortgage does notexceed the basis inthe contributedproperty [$10,000 −$6,000 + ($6,000 ×33%)].30) APartnerships don't recognize any gain on thereceipt of contributed appreciated property.The built-in gain or built-in loss will bereported at the time of disposition of the asset.To ensure this result, the partnership's basis inthe acquiredproperty is acarryover basis.31) APartnerships don't recognize any gain on thereceipt of contributed appreciated property.The built-in gain or built-in loss will bereported at the time of disposition of the asset.To ensure this result, the partnership's basis inthe acquiredproperty is acarryover basis.32) DA contributing partner's outside basis initiallyconsists of the basis of contributed propertyless any debt reliefplus any partnershipVersion 187
debt allocated to the partner. When allocatingnonrecourse debt secured by the contributedproperty, any nonrecourse debt that exceedsthe basis of the contributed property must beallocated solely to the partner that contributedthe property. Any remaining nonrecourse debtis allocating according to the partners' profit-sharing ratios [$5,000 (cash) + $30,000 (basisof building) − $35,000 (debt on building) +$25,000 (50% profit-sharing ratio × $50,000nonrecourse bankloan) + $5,000(nonrecoursemortgage less basisof contributedproperty) + $15,000(50% × $30,000remaining mortgageon building) =$45,000].33) DA contributing partner's outside basis initiallyconsists of the basis of contributed propertyless any debt relief plus any partnership debtallocated to the partner. When allocatingnonrecourse debt secured by the contributedproperty, any nonrecourse debt that exceedsthe basis of the contributed property must beallocated solely to the partner that contributedthe property. Any remaining nonrecourse debtis allocating according to the partners' profit-sharing ratios [$4,600 (cash) + $28,000 (basisof building) − $33,000 (debt on building) +$24,000 (50% profit-sharing ratio × $48,000nonrecourse bankloan) + $5,000(nonrecoursemortgage less basisof contributedproperty) + $14,000(50% × $28,000remaining mortgageon building) =$42,600].
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