Amy and Mitchell are equal partners in the accrual basis AM Partnership. At the beginning of the current tax year, Amy’s capital account has balloted parties. Assumethat all partnership recourse debts of $200,000 payable to unrepartners. The following information about AM’s operations for the current year is obtained from the partnership’s records:

Assume the same facts as in problem 44. Prepare Amy’s tax-basis capital account roll forward from the beginning to the end of the tax year. How does her capital account differ from her basis as calculated in Problem 44?  Information from question 44 is recorded below.
(44) Amy and Mitchell are equal partners in the accrual basis AM Partnership. At the beginning of the current tax year, Amy’s capital account has balloted parties. Assumethat all partnership recourse debts of $200,000 payable to unrepartners. The following information about AM’s operations for the current year is obtained from the partnership’s records:
Ordinary income                                 $400,000
Interest income                                         4,000
Long-term capital loss                               6,000
Short-term capital gain                            12,000
Charitable contribution                              4,000
Cash distribution to Amy                        20,000
Assume that year-end partnership debt payable to unrelated parties is $140,000. If all transactions are reflected in her beginning capital and basis in the same manner, what is Amy’s basis in the partnership interest:

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  1. At the beginning of the year?
  2. At the end of the year?

Use this information to complete question 46.
Chapter 11
Question 41
In 2012, Adrianna contributed land with a basis of $16,000 and a fair market value of
$25,000 to the A&I Partnership in exchange for a 25% interest in capital and profits. In
2015, the partnership distributes this property to Isabel, also a 25% partner, in a non-
liquidating distribution. The fair market value had increased to $30,000 at the time the
property was distributed. Isabel’s and Adrianna’s bases in their partnership interests were
each $40,000 at the time of the distribution.

  1. How much gain or loss, if any, does Adrianna recognize on the distribution to Isa bel? What is Adrianna’s basis in her partnership interest following the distribution?
  2. What is Isabel’s basis in the land she received in the distribution?
  3. How much gain or loss, if any, does Isabel recognize on the distribution? What is Isabel’s basis in her partnership interest following the distribution?
  4. How much gain or loss would Isabel recognize if she later sells the land for its $30,000 fair market value? Is this result equitable?
  5. Would your answers to (a) and (b) change if Adrianna originally contributed the property to the partnership in 2003? Explain.

Chapter 12
Question 36
Money, Inc., a calendar year S Calendar year S corporation in Denton, Texas, has two unrelated shareholders, each owning 50% of the stock. Both shareholders have $400,000 stock basis as of January 1, 2015. At the beginning of 2015, Money has an AAA of $300,000 and AEP of $600,000. During 2015, Moneydistributes securities worth $1 million, with an adjusted basis of $800,000. Determine the tax effects of these transactions.

 
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