Reference no: EM133115757
Question - Zack, Yasmine, and Xavier form a general partnership (ZYX) by contributing the following property in exchange for equal 1/3rd interests in the partnership:
Zack contributes GreenAcre, a capital asset Allie acquired 4 years ago, worth $1000. Zack has a tax basis of $400 in GreenAcre.
Yasmine contributes inventory with a basis of $300 and a value of $600, plus $400 in cash.
Xavier contributes stock with a value of $700 and cash of $300. Xavier has a basis of $400 in the stock.
Required -
1. What gain and/or loss will be recognized by the partner and the partnership on formation?
2. Construct an opening balance sheet for the ZYX partnership.
3. What will be the partnership's "inside basis" for the contributed property?
4. What will be the partners' "outside bases" be?
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