How much gain will each partner recognize

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Question - The XYZ partnership has the following balance sheet:

Assets Tax Basis FMV

Real estate $120,000 $180,000

Liabilities $0 $0

Capital

X $40,000 $60,000

Y $40,000 $60,000

Z $40,000 $60,000

$120,000 $180,000

If Q provides $45,000 of services in exchange for a $25% interest in the partnership, what is the tax effect to Q, X, Y, Z, and XYZ?

Assume all of the partners are individuals. How much income does Q recognize? How much gain do X, Y, and Z recognize? How much of a deduction do they get? What basis will XYZ have in the Real estate? What is the balance sheet afterward? If the property is later sold for $180,000, how much gain will each partner recognize? What if it is later sold for $200,000?

Reference no: EM131987968

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