Reference no: EM133090510

Question - For each of the following situations, determine the amount of income that the partner should report as income from the partnership or the amount of capital gain or loss the partner should recognize.

For each item, enter the appropriate amount in the associated cell. If the amount is zero, enter a zero (0). If no amount is required, enter a zero (0) or leave the cell blank.

Situation

1. Jimmy owns a 30% share of a partnership with an AB of $28,000. He gave his share of the partnership to Ricky as a gift. At that time, the partnership had total liabilities of $100,000. How much gain (if any) must Jimmy recognize?

2. Jerry has a 15% interest in the profit and losses of a partnership. The partnership's ordinary income is $125,000 before a $10,000 deduction for a guaranteed payment made to Jerry for services rendered. What is Jerry's total reportable income?

3. Goldie has a 25% interest in a partnership. For the year ended December 31, Year 2, Goldie's share of partnership income was $50,000, which included LTCG of $6,000, tax-exempt income of $3,000, $10,000 of interest, and $700 of dividends. What is Goldie's ordinary business income allocation?

4. Betsy contributed an asset with an AB of $60,000 and a FMV of $75,000 when she joined a partnership as a 50% partner. Two years later, the partnership sold the asset for $100,000. How much of the gain should be allocated to Betsy?

5. David sold 35% of his business to his daughter, Morgan. The new partnership had operating income of $75,000. David performed services worth $40,000, and Morgan performed no services. Capital is a material income-producing factor. How much income should Morgan report?