Essay Homework Solutions Spilker Et Al. Ch. 20 - 1333 Words

Homework Solutions: Spilker et al. C h. 20 40. Harry and Sally formed the Evergreen partnership by contributing the following assets in exchange for a 50 percent capital and profits interest in the partnership: Harry: Cash Land Totals Basis Fair Market Value $ 30,000 $ 30,000 100,000 120,000 $ 130,000 $ 150,000 Sally: Equipment used in a business Totals 200,000 $ 200,000 150,000 $ 150,000 a. How much gain or loss will Harry recognize on the contribution? b. How much gain or loss will Sally recognize on the contribution? c. How could the transaction be structured a different way to get a better result for Sally? d. What is Harry’s tax basis in his partnership interest? e. What is Sally’s tax basis in her†¦show more content†¦$55,000. See table in part a. above. c. $285,000 each. See table in part a. above. d. $625,000. Albee, LLC takes a $135,000 carryover basis in the assets Kevan contributes and a $490,000 basis in the total cash the other two members contributed. 4 e. Albee, LLC’s tax basis balance sheet would appear as follows: Albee , LLC Tax Basis Balance Sheet Tax Basis Assets: Cash $505,000 Land 120,000 Totals $625,000 Liabilities and Capital: Mortgage debt $210,000 Capital-Kevan (75,000) Capital-Jerry 245,000 Capital-Dave 245,000 Totals $625,000 Note that the members’ tax capital accounts are equal to their bases in the LLC interests less their individual shares of LLC debt. 5 f. $5,000. See table below: Description (1) Basis in contributed Kevan Jerry Dave Explanation $245,000 $120,000 Land (2) Cash contributed $15,000 $245,000 (3) Mortgage $70,000 $140,000 $0 33.33% x Guarantee $210,000 for Kevan and 66.67% x $210,000 for Jerry (4) Basis immediately $205,000 $385,000 $245,000 1+2+3 ($210,000)