2. On January 1, 2022, C and D form an equal partnership to which C contributes machinery with a tax basis of (a) $2,000 and a fair market value of (b) $3,000. D contributes cash of (b) $3000 The machinery is being depreciated on a straight-line basis and has a remaining life of five years. The partnership also has ordinary income of (c) $280 A. Using the traditional method, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Depreciation Depreciation Ordinary income Tax Tax C с Book B. Assume, instead, that the basis of the equipment contributed by C is only (d) $800 at the time of contribution. All the other facts are the same. Using the traditional method with curative allocations, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Also, show the allocation of the ordinary income to C and D for the current year. Tax Book D Tax Book D Book
2. On January 1, 2022, C and D form an equal partnership to which C contributes machinery with a tax basis of (a) $2,000 and a fair market value of (b) $3,000. D contributes cash of (b) $3000 The machinery is being depreciated on a straight-line basis and has a remaining life of five years. The partnership also has ordinary income of (c) $280 A. Using the traditional method, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Depreciation Depreciation Ordinary income Tax Tax C с Book B. Assume, instead, that the basis of the equipment contributed by C is only (d) $800 at the time of contribution. All the other facts are the same. Using the traditional method with curative allocations, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Also, show the allocation of the ordinary income to C and D for the current year. Tax Book D Tax Book D Book
Chapter21: Partnerships
Section: Chapter Questions
Problem 25CE
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Transcribed Image Text:2.
On January 1, 2022, C and D form an equal partnership to which C contributes machinery
with a tax basis of (a) $2,000 and a fair market value of (b) $3,000. D contributes cash of (b) $3000
The machinery is being depreciated on a straight-line basis and has a remaining life of five years. The
partnership also has ordinary income of (c) $280
A. Using the traditional method, determine the tax basis and Sec. 704(b) book basis
depreciation for C and D for Year 1.
Depreciation
Depreciation
Ordinary
income
Tax
Tax
C
с
Book
B. Assume, instead, that the basis of the equipment contributed by C is only (d) $800 at the
time of contribution. All the other facts are the same. Using the traditional method with
curative allocations, determine the tax basis and Sec. 704(b) book basis depreciation for
C and D for Year 1. Also, show the allocation of the ordinary income to C and D for the
current year.
Tax
Book
D
Tax
Book
D
Book
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