Assume that all partnership interests expressed as percentages are those percentages of both profits/losses and capital. Assume that all liabilities are recourse.
Assume that all partnership interests expressed as percentages are those percentages of both profits/losses and capital. Assume that all liabilities are recourse.
Chapter21: Partnerships
Section: Chapter Questions
Problem 4BCRQ
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Transcribed Image Text:Partnership(taxation)
Assume that all partnership interests
expressed as percentages are those
percentages of both
profits/losses and capital. Assume that all
liabilities are recourse.
a) Three individuals, C, D, and E, form CDE
LLC. CDE LLC does not "check the box" to
become a corporation and therefore is
treated as a partnership for tax purposes. C
contributes land,
AB 70 FMV 100 and cash of 20. D
contributes inventory (in the hands of both
D and CDE), AB 50
FMV 120. E contributes services. In
exchange, each partner receives a 1/3
interest in the LLC.
What are the consequences to all of the
parties?
(b) Same as (a) except that C's land is
subject to an assumable mortgage of 30
and has a FMV of
130
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