69. Frankie Firth purchased from Johnny Johnson a one-third interest in the Sweetheart Partnership for $105,000 cash. The balance sheet of Sweetheart at the time of the purchase was: Basis FMV Cash $80,000 $80,000 Accounts receivable--0-- 40,000 Inventory 50,000 75,000 Building 120,000 150,000 Land 20,000 30,000 Total $270,000$375,000 Liabilities $60,000 $60,000 Johnny's capital 70,000 105,000 Lover's capital 70,000 105,000 Star's capital 70,000 105,000 Total $270,000$375,000 On the day after Frankie's purchase, Sweetheart sold the building for $150,000 cash.
(a.) What gain will be reported by the partners assuming no Section 754 election was made by the partnership? (b.) What gain will be reported by the partners assuming that the Section 754 election was in effect when Frankie made her purchase of the partnership interest? Correct Answer: 70. Barbara Bayes, a one-third partner in the Sherman Court Partnership, received a $95,000 cash payment in complete liquidation of her partnership interest. Barbara's basis in her partnership interest was $71,667. The balance sheet of Sherman Court on the distribution date was: Basis FMV Cash $150,000$150,000 Accounts receivable--0-- 60,000 Inventory 15,000 50,000 Land 50,000 90,000 $215,000$350,000 Liabilities $65,000 $65,000 Abner's capital 50,000 95,000 Barbara's capital 50,000 95,000 Charles' capital 50,000 95,000 $215,000$350,000 Determine the amount and the character of the gain to be reported by Barbara.
71. On January 4, Barney Bubbles contributed $20,000 cash to Dracon Partnership for a one-fourth interest. His adjusted basis in the partnership at the end of the year was $35,000, which included his $15,000 share of partnership liabilities. The partnership has no unrealized receivables or substantially appreciated inventory items. On December 31, Barney sold his interest in Dracon for $30,000 cash. Barney had been paid his share of Dracon's income for the year. What is the amount of Barney's capital gain or loss?
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