Amy and Mitchell are equal partners in the accrual basis AM partnership. At the beginning of the current year, Amy's capital account has a balance of 300,000, and the partnership has a recourse debts of 200,000 payable to unrelated parties. Assume that all partnership recourse debt is shared equally between the partners. The following information about AM's operation for the current year is obtained from the partnership records.
Ordinary income 400,000
Interest income 4,000
Long-term capital loss 6,000
Short term capital gain 12,000
Charitable contribution 4,000
Cash distribution to Amy 20,000
Assume that year-end partnership debt payable to unrelated parties is 140,000. If all transactions are reflected in her beginning capital and basis is the same manner what is Amy's basis in the partnership interest
At the beginning of the year?
At the end of the year?
48. The KL partnership is owned equally by Kayla and Lisa. Kayla basis is 20,000 at the beginning of the tax year. Lisa's basis is 16,000 at the beginning of the year. KL reported the following income and expenses for the current year:
Sales Revenue 150,000
Cost of Sales 80,000
Distribution to Lisa 15,000
Depreciation expense 20,000
Utilities 14,000
Rent Expense 18,000
Long-term capital gain 6,000
Payments to Mercy Hospital for Kayla's medical expenses 12,000
Determine the ordinary partnership income and separately stated items for the partnership
Calculate Kayla's basis in her partnership interest at the end of the tax year. What items should Kayla report on her Federal income tax return?
Calculate Lisa's basis in her partnership interest at the end of the tax year. What items should Lisa report on her Federal income tax return?
50. Suzy contributed business related assets valued at 360,000 (basis of 200,000) in exchange for her 40% interest in the Suz-Anna Partnership. Anna contributed land and a building valued at 640,000 (basis of 380,000 in exchange for the remaining 60% interest. Anna's property was encumbered by a qualified nonrecourse debt of 100,000, which was assumed by the partnership. The partnership reports the following and expenses for the current tax year:
Sales 560,000
Utilities, salaries, and other operating expenses 360,000
Short term capital gain 10,000
Tax exempt interest income 4,000
Charitable contributions 8,000
Distribution to Suzy 10,000
Distribution to Anna 20,000
During the current tax year, Suz-Anna refinanced the land and building. At the end of the year, Suz-Anna had recourse debt of 100,000 for partnership accounts payable and qualified nonrecourse debt of 200,000.
What is Suzy's basis after the formation of the partnership? Anna's basis?
What income and separately state items does the partnership report on Suzy's Schedule K-1? What items does Suzy report on her tax return?
Assume that all partnerships debts are shared proportionately. At the end of the tax year, what are Suzy's basis and amount at risk in her partnership interest?