ACC401 week 5

48. Denise contributes the following assets to a partnership in exchange for a 25% partnership interest:

                                                                          FMV             Basis

                        Cash                                        $20,000           $20,000

                        Office Equipment                     12,000               5,000

                        Auto                                          20,000               6,000

What is Denise’s beginning basis in her partnership interest?  

49. On June 1 if the current year, Patti contributes equipment with a $45,000 basis and a $35,000 FMV in exchange for a partnership interest.  She purchased the equipment three years ago.

a. What is Patti’s basis in her partnership interest?

b. What is Patti’s holding period of her partnership interest?

c. What is the basis of the equipment in the hands of the partnership?

d. What is the holding period of the equipment in the hands of the partnership?

e. How will the partnership depreciate the equipment in the year of contribution?

52. Barry and Kurt are equal partners in the BK partnership.  Barry receives a guaranteed payment of $55,000.  In addition to the guaranteed payment, Barry withdraws $10,000 from the partnership.  The partnership has $24,000 in ordinary income during the year.

a. How much income must Barry report from BK Partnership?

b. What is the effect on Barry’s partnership basis?

Chapter 15

47. Determine the basis of stock in the hands of the shareholder in each of the following instances. 

a. Contribution of property with a basis of $1,000 and FMV of $1,400.

b. Contribution of property with a basis of $3,000 and a FMV of $3,800. 

c. Contribution of property with a basis of $8,200 and FMV of $12,500. 

d. Contribution of a building with a FMV of $200,000, a mortgage (assumed by the corporation) of $100,000, and a basis of $125,000.

e. Contribution of a building with a FMV of $1,700,000, a mortgage (assumed by the corporation) of $1,000,000, and a basis of $635,000.

48. Using the information from Problem 47, determine the basis of the property contributed in the hands of the corporation in each instance.  Assume that the 80% rule is met in all cases.

a. The basis of the property would be ...............

b. The basis of the property would be .......................

c. The basis property would be ...............................

d. The basis property would be .....................................

e. The basis property would be............................................