Partnership and Corporate Tax Reporting

Problem 1

a. Does any of the partners recognize any gain? If so, how much? Explain.

One partner, Carol will have a gain.

To determine her gain,

FMV*Interest

The total FMV = 200,000 + 100,000

= 300,000

Interest = 10%

Therefore, gain will be;

300,000 * 10%

= $30,000

Her gain will be $30,000, which she recognizes for service exchange. She receives the gain since she has a guaranteed payment. 

b. What is the basis for each partner in his or her partnership interest?

Darrel and Sissy will have the same basis of contribution, which will $100,000 and $50,000 respectively while the basis for Carol in her partnership interest will be her gain, which is $ 30,000.

c. What is the basis to the partnership of each asset?

The basis to the partnership of equipment will be the same to the basis of each partner in their partnership interest, which will be $100,000 (equipment) and $50,000 (building).

Problem 2

a. Wayne’s Self-employment Income.

To d...