What items are deductible to the partnership

Reference no: EM131922155

Question: Advanced Tax Accounting. Please show all work.

1. In a proportionate liquidating distribution, Green Lantern received cash of $150,000, inventory (basis of $5,000, fair market value of $25,000), and a capital asset (basis and fair market value of $30,000). Immediately before the distribution, Green Lantern's basis in the partnership interest was $100,000.

a. How much gain or loss will Green Lantern recognize on the distribution of cash? What is the character of the gain or loss?

b. What is Green Lantern's basis in the inventory and capital asset?

2. In the current tax year, ME, LLC had gross receipts of $500,000 and had $125,000 in rent and utilities. The partnership made Guaranteed Payments of $100,000 and a $50,000 distribution to Spiderman a 50% member, $25,000 to Iron Man for consulting services, a $25,000 as a distribution to Black Widow. In addition, the LLC earned $5,000 of tax exempt interest income. Spiderman is the managing member of the LLC. Spiderman's outside basis was $125,000 at the beginning of the year, and includes a $30,000 share of liabilities. At the end of the year, his share of partnership liabilities is $50,000.

a. What items are deductible to the partnership?

b. What is the amount and character of Spiderman's income? Show your calculations.

c. What is Spiderman's ending basis? Show your calculations.

3. Naruto is an equal partner in the N&K Partnership. At the beginning of this tax year, Naruto's adjusted basis in N&K was $60,000 (including each partner's $15,000 share of the partnership's $30,000 of liabilities). During the current year, N&K repaid $25,000 of the debt and borrowed $20,000 for which Naruto is equally liable with his partner. In the current year ended December 31, N&K also sustained a net operating loss of $50,000 and earned $2,000 of interest income from investments. How much is Naruto's outside basis in N&K at the beginning of the next tax year?

Reference no: EM131922155

Questions Cloud

Osteoporosis in tuscany and naples : Calculate the age-adjusted rate of osteoporosis in Tuscany and Naples using the direct method and data in Table 6.

What direct labour cost should have been incurred : During July, 6,850 hours of direct labour time were recorded to make 22,000 units. What direct labour cost should have been incurred to make 22,000 DVD players

What are project management processes : Why should a project management and project management team be concerned about both types of processes when managing a project?

State the strengths and weaknesses of each template : For this research assignment, do an internet search for "project closure/close out templates."

What items are deductible to the partnership : What items are deductible to the partnership? What is the amount and character of Spiderman's income? Show your calculations.

Gold standard of a biopsy done : A new gene scan is developed to detect a certain type of cancer. It is studied in 100 patients who also have the gold standard of a biopsy done.

What is the normal duration and cost of the project below : What is the normal duration and cost of the project below? What is the fastest it can be completed and how much will it cost?

Several days selling prices : Suppose you own a share of a company's stock. Over the past several days its selling prices has been right around $14.89. For the history of the company

What does the article suggest are some of the pitfalls : Project champions can dramatically improve the chances of project success, but they can also have some negative effects.

User Account

All Pages