Retiring partner A is to receive $120,000 for his partnership interest spread over a 4-year period and paid in installments of $30,000 per year. If A's basis is $64,000 and the payments are considered to be Section 736(b) payments, how much must A report in Year 1 if no election is made?
Retiring partner A is to receive $120,000 for his partnership interest spread over a 4-year period and paid in installments of $30,000 per year. If A's basis is $64,000 and the payments are considered to be Section 736(b) payments, how much must A report in Year 1 if no election is made?
Chapter11: Invest Or Losses
Section: Chapter Questions
Problem 34P
Related questions
Question
Retiring partner A is to receive $120,000 for his
Expert Solution
Step 1
According to the special Rule of Section 736 (b)(2), unrealised receivables and goodwill are not considered as partnership property. The payment received in the year 2 by exchanging with interest in partnership property will not be included and it is considered as unrealized receivables.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT