B what will be the balance in his capital account on

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b.What will be the balance in his capital account on the partnership’stax basisbalance sheet at the end of Year 5?
c.What is Farley’s tax basis in his partnership interest at the end of year 5? (Assumethe partnership has total liabilities of $500,000, as in question 3 above). Whichcapital account must Farley’s tax preparer be able to access in order to computehis basis in the partnership interest (and thus the proper amount of gain torecognize in connection with sale of that interest)?
©2015 CCH Incorporated. All Rights Reserved.
Practical Guide to Partnerships and LLCs—Instructor’s Guide Solutions4d.How much gain will Farley recognize in connection with sale of his interest?
5.Class Time Partners is a general partnership with the following balance sheets:BasisFMVCash$15,000$15,000Capital assets35,00075,000Land85,000240,000Totals$135,000$330,000Recourse liabilities$90,000$90,000Capital, Claire15,00080,000Capital, Lorie15,00080,000Capital, Tom15,00080,000Totals$135,000$330,000The partners share equally in profits, losses and capital. Tom is negotiating to sellone-halfof his interest in the partnership to an unrelated buyer. Assume the buyer iswilling to pay $50,000 cash for half Tom’s interest.a.What will be the amount realized by Tom on the sale?
b.What is the tax basis of the interest to be sold by Tom?
c.How much gain will Tom recognize on the sale?
d.What will be the buyer’s tax basis in the newly acquired interest?
©2015 CCH Incorporated. All Rights Reserved.
Practical Guide to Partnerships and LLCs—Instructor’s Guide Solutions5Reading:Paragraphs 1104, 1105.

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Term
Spring
Professor
games
Tags
Balance Sheet, CCH Incorporated

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