What are the tax consequences to dennis

Assignment Help Accounting Basics
Reference no: EM131748819

Question: 1. Donna purchased Dennis' one-third interest of the DEF LLC (which is taxed as a partnership) for $125,000. In connection with Donna's purchase, the LLC made a § 754 election. The DEF LLC uses the accrual method of accounting with respect to sales of inventory and the cash method with respect to the provision of services. When Donna purchased her one-third interest, the DEF LLC's assets and capital accounts were as follows:

Assets

Adjusted Basis

F.M.V.

Capital Accounts

Adjusted Basis

F.M.V

Cash

$9,000

$9,000

D

$75,000

$125,000

Accounts Receivable

$6,000

$36,000

E

$75,000

$125,000

Inventory

$60,000

$120,000

F

$75,000

$125,000

Land

$45,000

$30,000




Building

$105,000

$180,000





$225,000

$375,000


$225,000

$375,000

The land and building are § 1231 assets. The building has accumulated depreciation of $75,000 taken on a straight-line basis.

a. What are the tax consequences to Dennis (the seller)?

b. Determine the § 743(b) special basis for each of the LLC's assets with respect to Donna (the purchaser).

Reference no: EM131748819

Questions Cloud

Should worship be organized : In your own opinion - should worship be organized or is it better to worship on your own - one side and present a compelling argument
What did you learn in history classes beyond just names : For instance, what did you learn in history classes beyond just names, dates, and places? Apply the principles of critical thinking to contemporary issues.
Develop a message to persuade a specific target audience : Final Paper - Communications Campaign: Develop a message to persuade a specific target audience to enact or not enact a specific behavior
Which retailers have the strongest image and equity : Which retailers have the strongest image and equity in your mind? Think about the brands they sell. Do they contribute to the equity of the retailer?
What are the tax consequences to dennis : Donna purchased Dennis' one-third interest of the DEF LLC (which is taxed as a partnership) for $125,000. In connection with Donna's purchase.
Review the details of the benchmark assignment : Review the details of the benchmark assignment. A compiled and revised draft of the benchmark assignment assembled from Topics 1-4 is due in Topic 5.
Develop an informative presentation - employment interview : Discuss the topic of appropriate dress for employment interview - Develop a 10 minute informative presentation - Refer to and apply the strategies outlined
Develop complete instructional strategy for training program : Develop a complete instructional strategy for your training program following the example in Table 8-2 in Chapter 8.
What are the tax consequences of the transfer of greenacre : Gail and Harvey formed the GH Partnership (a general partnership). Gail contributed $400,000 of cash and has a one-third interest in profits and loss.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How will each error come to the bookkeepers attention

How will each error come to the bookkeeper's attention, other than by chance discovery?

  Explain incentive plans can influence performance measures

Incentive plans can influence performance measures by providing intrinsic and/or extrinsic motivation to complete tasks more efficiently and work toward goal congruence.

  The interest is paid annually

What will the price of this bond be if the interest is paid annually?

  Determine the ending inventory and the cost

Smythe Company Inc. had a beginning inventory of 200 units of Product ERV at a cost of $6 per unit. During the year, purchases were: Jan. 24 800 units at $7 Aug. 19 600 units at $ 9 Apr.

  Which causes wider swings in total return

How important are dividends as a source of return to common stock? What about capital gains? Which is more important to total return?

  Determine the cost of goods available for sale

Pronghorn Corp markets CDs of numerous performing artists. Determine the cost of goods available for sale

  Round calculations to the nearest thousand

Prepare the journal entry to record the revaluation of the equipment. Round calculations to the nearest thousand.

  Audio max electronics company manufactures electronic

audio max electronics company manufactures electronic stereo equipment. the manufacturing process includes printed

  Determine the amount deductible in arriving

Capital Gains and Losses. Each of the following independent cases involves capital gains and losses occurring during the calendar year for an unmarried individual taxpayer.

  Determine the equal annual withdrawls

Beginning on december 31, 2011, six equal annual withdrawals are to be made. Determine the equal annual withdrawls if $11,000 is invested at 10% interest compounded annually on December 31, 2010

  Farber corp a distributor of her-based sunscreen is ready

farber corp. a distributor of her-based sunscreen is ready to begin its 3-quarter in which peak sales occur. the

  Greg lawrence anticipates he will need approximately 21800

greg lawrence anticipates he will need approximately 21800 in 15 years to cover his 3 year old daughters college for 4

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd