the depreciation deduction in each year (from year 1 to year 3) will D be allowed
Assume the same facts as the prior problem.
If the building is sold at the end of
year three for $4,100,000, how much gain would each partner have to recognize?
Partners A and B each contribute $100,000 for 50% of the AB partnership.
partnership allocations meet the three tests for economic effect, and the four tests
for a valid allocation of nonrecourse deductions are met as well.
They use the
$200,000 cash and $1,800,000 of debt to buy a building that is depreciable over
20 years on a straight line basis.
$200,000 of the debt is nonrecourse, and is
subordinate to the other $1,600,000 of recourse debt.
Income equals expenses in
all years, except for depreciation, which is allocated completely to B.
of the depreciation deduction in each year (from year 1 to year 5) will B be
allowed to take?
Assume that in Problem 7 above B does not have a deficit capital account
restoration requirement (A still does), but with respect to B the alternate test for
economic effect is met.
The partnership agreement still allocates all depreciation
How would the depreciation be allocated in years 1-5?
What would your answer to Number 8 be if the nonrecourse debt had priority over
the recourse debt?
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