Tax consequences of sale and land when forming a partnership
Not what you're looking for?
Mike and Lisa formed a partnership at the beginning of the year. They were equal partners and they had the same basis. When the partnership was formed, Mike contributed the following items:
Basis FMV
Building $150,000 $200,000
Land $ 60,000 $ 70,000
Equipment $50,000 $ 40,000
Total $260,000 $310,000
In order to raise funds for operation of the business the partnership sold both the land and building in the 5th month of operation.
The land was sold for $70,000 and the building was sold for $230,000.
What are the tax consequences of the sale of the land and building on each of the partners?
Purchase this Solution
Solution Summary
The tax consequences of sale and land when forming a partnership is determined.
Solution Preview
As a general rule, no gain or loss is recognized on the contribution of money or property to a partnership. When a partner contributes appreciated or depreciated property to a partnership, the property has an inherent built-in gain or built-in loss that ...
Purchase this Solution
Free BrainMass Quizzes
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.