Reference no: EM133606252
Question: This project covers general partnership basis issues including computation of partners' adjusted basis, determination of current-year tax position, preparation of tax forms, and creation of a memo to the partners with an analysis of their current-year tax issues and changes to basis.
In the current year, Mary, Andrew, and Paul formed Venezia General Partnership. Mary contributed $55,000 cash, Andrew contributed $55,000, and Paul contributed land with a cash basis of $70,000 and a fair market value of $180,000. The partnership assumed a $70,000 mortgage on the land; no partner is personally liable for the mortgage. At the end of the current year, Venezia made a $7,000 payment on the mortgage. Mary, Andrew, and Paul will split all profits and losses equally.
Current-year operations had the following results:
Sales revenue: $260,000
Cost of goods sold: $205,000
Operating expenses: $35,000
Long-term capital gains: $1,200
Section 1231 Gains: $450
Charitable contributions: $350
Municipal bond interest: $150
Salary paid as a guaranteed payment to Andrew (not included in expense): $1,500