Neil has a partnership basis of $100,000 and receives $40,000 of cash, inventory with a basis to the partnership of $30,000, and a capital asset with a partner- ship basis of $20,000. The inventory and capital asset have fair market values of $20,000 and $30,000, respectively. d. Oscar has a partnership basis of $40,000 and receives a distribution of $10,000 of cash and an account receivable with a basis of $0 to the partnership (value is $15,000).
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
In each of the following independent liquidating distributions in which the partnership also liquidates determine the amount and character of any gain or loss to be recognized by each partner and the basis of each asset (other than cash) received. In each case, assume that distributions of hot assets are proportionate to the partners. Be sure to explain your rationale.
c. Neil has a partnership basis of $100,000 and receives $40,000 of cash, inventory with a basis to the partnership of $30,000, and a capital asset with a partner- ship basis of $20,000. The inventory and capital asset have fair market values of $20,000 and $30,000, respectively.
d. Oscar has a partnership basis of $40,000 and receives a distribution of $10,000 of cash and an account receivable with a basis of $0 to the partnership (value is $15,000).
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