Shareholders gain or loss recognized on the formation

Assignment Help Financial Accounting

Reference no: EM131262500

At the beginning of the current year, Able and Baker formed the AB Partnership by transferring cash and property to the partnership in exchange for a partnership interest, with each having a 50% interest. Specifically, Able transferred property having a $50,000 FMV, a $30,000 adjusted basis, and subject to a $10,000 liability, which the partnership assumed. Baker contributed $40,000 cash to the partnership. The partnership also borrowed $28,000 from the bank to use in its operations. All liabilities are recourse for which the partners have an equal eco-nomic risk of loss. During the current year, the partnership earned $24,000 of net ordinary income and reinvested this amount in new property. a. What is the partnership’s and each partner’s gain or loss recognized on the formation of the partnership? b. What is each partner’s basis in his or her partnership interest at the end of the current year? c. For the partnership, prepare a tax and book balance sheet at the end of the current year. d. Assume instead that Able and Baker formed a corporation rather than a partnership. What is the corporation’s and each shareholder’s gain or loss recognized on the formation of the corporation? What is each shareholder’s basis in his or her stock at the end of the current year? Copyright | Prentice Hall | Prentice Hall's Federal Taxation 2016 Comprehensive | Edition 29

Reference no: EM131262500

Questions Cloud

Describe the pros and cons of affirmative action : Argue one way or another the concept of "reverse discrimination" making sure to note what protection is afforded all classes by Title VII and to whom it applies. Discuss the ethical implications of affirmative action such as those discussed in vari..

Find a new product or system that manipulates secret data : Find a new product or system that manipulates secret data. This might be the same product or system you analyzed for Exercise 1.8. Conduct a security review

The ability to assess quality of goods compared to services : What assumptions can you make about the ability to assess the quality of goods compared to services? - Is it easier to assess the quality of some goods than others?

Create a cost-benefit analysis spreadsheet : Accounting Information Systems Excel Spreadsheet Assignment. Create a cost-benefit analysis spreadsheet for both in-house and outsourced development: Create s spreadsheet, format and use formulas to identify the cost-benefit analysis for alternativ..

Shareholders gain or loss recognized on the formation : At the beginning of the current year, Able and Baker formed the AB Partnership by transferring cash and property to the partnership in exchange for a partnership interest, with each having a 50% interest. What is the corporation’s and each shareholde..

What skill juanita have to develop better ful fill herrole : What skills might Juanita have to develop to better fulfill her role? How might Juanita engage line managers to become more involved in what has traditionally been HR's function in this organization? Why? Which aspects of human resource management ..

Compare and contrast the profiles of terrorist organizations : Select two different terrorist organizations. Compare and contrast the profiles of these groups. How do their motivations differ? How are they similar?

What types of traffic analysis information could eve learn : Eve is eavesdropping on the communications. What types of traffic analysis information could Eve learn by eavesdropping on the encrypted channel? Describe a situation in which information exposure via traffic analysis is a serious privacy problem.

Winning over the hearts and minds : 1. Based on John Kotter's video, The Heart of Change a. What does ‘winning over the hearts and minds' of people in the change process mean? b. Provide examples.

User Account

All Pages