The AB Partnership pays its only liability (a $100, 000 mortgage) on April 1 of
ID: 2741350 • Letter: T
Question
The AB Partnership pays its only liability (a $100, 000 mortgage) on April 1 of the current year and terminates that same day. Alison and Bob were equal partners in the partnerships in but have partnership bases immediately preceding these transactions of $110, 000 and $180, 000, respectively, including his or her share of liabilities. The two partners receive identical distributions with each receiving the following assets: The building has no depreciation recapture potential. What are the tax implications to Alison, Bob, and the AB Partnership of the April 1 transaction (i.e., basis of assets to Alison and Bob, amount and character of gain or loss recognized, etc.)? Assume that no SEC. 754 election is in effect.Explanation / Answer
Solution-
Tax implications therefore are:
Profit / Loss = Cash distributed - Partnership Basis Alison
Profit / Loss = 10000 - 110000 = -$110000 (Loss) Bob = 10000 - 180000 = -$170000 (Loss)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.