Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz-Anna GP (a general partnership in which both partners are active owners). Anna contributed land and a building valued at $640,00o (basis of $380,000) in exchange for the remaining 60% interest. Anna's property was encumbered by qualified nonrecourse financing of $100,000, which was assumed by the partnership. The partnership reports the following income and expenses for the current tax year. Sales $560,000 Utilities, salaries, depreciation, and other operating expenses 360,000 Short-term capital gain 10,000 Tax-exempt interest income 4,000 Charitable contributions (cash) 8,000 Distribution to Suzy 10,000 Distribution to Anna 20,000 During the current tax year, Suz-Anna refinanced the land and building (i.e., the original $100,000 debt was repaid and replaced with new debt). At the end of the year, Suz-Anna held recourse debt of $100,000 for partnership accounts payable (recourse to the partnership but not personally guaranteed by either of the partners) and qualified nonrecourse financing of $200,000. a. What is Suzy's basis in Suz-Anna after formation of the partnership? Anna's basis? Suzy's beginning basis in her partnership interest is $[ ) , and Anna's basis is $[ b. Enter the amounts for the following items that will appear on Suzy's Schedule K-1. Item Amount Ordinary income Short-term capital gain Tax-exempt interest income Charitable contributions Distribution received by Suzy What income, deduction, and taxes does Suzy report on her tax return? On her tax return, Suzy reports the ordinary income on . She reports the charitable contributions She reports the short-term capital gain on with her personal charitable contributions. Suzy might also be eligible for the qualified business income deduction; the partnership needs to provide additional information regarding subject to self-employment taxes. so that Suzy can calculate the deduction. Suzy c. Assume that all partnership debts are shared proportionately. At the end of the tax year, what are Suzy's basis and amount at risk in her partnership interest? Suzy's year-end basis in her partnership interest is s[ , and Suzy's amount at risk is $ d. Assume that Suz-Anna prepares the capital account rollforward on the partners' Schedules K-1 on a tax basis. What are Suzy's capital account balances at the beginning and end of the tax year? what accounts for the difference between Suzy's ending capital account and her ending tax basis in the partnership interest?
Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz-Anna GP (a general partnership in which both partners are active owners). Anna contributed land and a building valued at $640,00o (basis of $380,000) in exchange for the remaining 60% interest. Anna's property was encumbered by qualified nonrecourse financing of $100,000, which was assumed by the partnership. The partnership reports the following income and expenses for the current tax year. Sales $560,000 Utilities, salaries, depreciation, and other operating expenses 360,000 Short-term capital gain 10,000 Tax-exempt interest income 4,000 Charitable contributions (cash) 8,000 Distribution to Suzy 10,000 Distribution to Anna 20,000 During the current tax year, Suz-Anna refinanced the land and building (i.e., the original $100,000 debt was repaid and replaced with new debt). At the end of the year, Suz-Anna held recourse debt of $100,000 for partnership accounts payable (recourse to the partnership but not personally guaranteed by either of the partners) and qualified nonrecourse financing of $200,000. a. What is Suzy's basis in Suz-Anna after formation of the partnership? Anna's basis? Suzy's beginning basis in her partnership interest is $[ ) , and Anna's basis is $[ b. Enter the amounts for the following items that will appear on Suzy's Schedule K-1. Item Amount Ordinary income Short-term capital gain Tax-exempt interest income Charitable contributions Distribution received by Suzy What income, deduction, and taxes does Suzy report on her tax return? On her tax return, Suzy reports the ordinary income on . She reports the charitable contributions She reports the short-term capital gain on with her personal charitable contributions. Suzy might also be eligible for the qualified business income deduction; the partnership needs to provide additional information regarding subject to self-employment taxes. so that Suzy can calculate the deduction. Suzy c. Assume that all partnership debts are shared proportionately. At the end of the tax year, what are Suzy's basis and amount at risk in her partnership interest? Suzy's year-end basis in her partnership interest is s[ , and Suzy's amount at risk is $ d. Assume that Suz-Anna prepares the capital account rollforward on the partners' Schedules K-1 on a tax basis. What are Suzy's capital account balances at the beginning and end of the tax year? what accounts for the difference between Suzy's ending capital account and her ending tax basis in the partnership interest?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions
Section: Chapter Questions
Problem 18P
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Transcribed Image Text:Problem 10-40 (LO. 3, 6, 7, 9, 10, 11)
Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz-Anna GP (a general partnership in
which both partners are active owners). Anna contributed land and a building valued at $640,000 (basis of $380,000) in exchange for the
remaining 60% interest. Anna's property was encumbered by qualified nonrecourse financing of $100,000, which was assumed by the
partnership.
The partnership reports the following income and expenses for the current tax year.
Sales
$560,000
Utilities, salaries, depreciation, and other operating expenses
360,000
Short-term capital gain
10,000
Tax-exempt interest income
4,000
Charitable contributions (cash)
8,000
Distribution to Suzy
10,000
Distribution to Anna
20,000
During the current tax year, Suz-Anna refinanced the land and building (i.e., the original $100,000 debt was repaid and replaced with new
debt). At the end of the year, Suz-Anna held recourse debt of $100,000 for partnership accounts payable (recourse to the partnership but
not personally guaranteed by either of the partners) and qualified nonrecourse financing of $200,000.
a. What is Suzy's basis in Suz-Anna after formation of the partnership? Anna's basis?
Suzy's beginning basis in her partnership interest is $
and Anna's basis is $
b. Enter the amounts for the following items that will appear on Suzy's Schedule K-1.
Item
Amount
Ordinary income
Short-term capital gain
Tax-exempt interest income
Charitable contributions
Distribution received by Suzy
What income, deduction, and taxes does Suzy report on her tax return?
On her tax return, Suzy reports the ordinary income on
She reports the short-term capital gain on
. She reports the charitable contributions
with her personal charitable contributions. Suzy might
also be eligible for the qualified business income deduction; the partnership needs to provide additional information regarding
subject to self-employment taxes.
so that Suzy can calculate the deduction. Suzy
c. Assume that all partnership debts are shared proportionately. At the end of the tax year, what are Suzy's basis and amount at risk in
her partnership interest?
Suzy's year-end basis in her partnership interest is $
and Suzy's amount at risk is $
d. Assume that Suz-Anna prepares the capital account rollforward on the partners' Schedules K-1 on a tax basis. What are Suzy's capital
account balances at the beginning and end of the tax year? What accounts for the difference between Suzy's ending capital account and her
ending tax basis in the partnership interest?
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