Acc401 Week 5

Week 5 Assignment
By: Felicia Bailey
Course: ACC401 Federal Income Taxes 1
Date: October 2, 2014
Professor: Brent Tabor

Week 5 Assignment
Chapter 14 Questions:
48. A partner contributes property to a partnership in order to enter into the partnership. The outside basis carries over property to the partnership. Which this concept is also known as basis –in, basis –out.
So, Denise’s beginning basis should be: Basis Cash $ 20,000 Office equipment $ 5,000 Auto $ 6,000 Partnership Basis $ 31,000
49. A. what is Patti’s basis in her partnership interest?
$45,000.
B. What is Patti’s holding period of her partnership interest?
The holding period is 3 years that is the same as equipment that is in the hands of the partner. The holding period starts the day after the taxpayer acquires the property and includes the day which property is sold.
C. What is the basis of the equipment in the hands of the partnership?
$45,000.
D. What is the holding period of the equipment in the hands of the partnership?
3 years.
E. How will the partnership depreciate the equipment in the year of contribution?
It will start to depreciate after the third year.
52. A. how much income must Barry report from BK Partnership?
Barry income:
Guaranteed payment $55,000
Ordinary income ($24,000*.50) $12,000 $67,000
B. What is the effect on Barry’s partnership basis?
Barry basis:
Income basis $12,000
Withdraw $10,000 $ 2,000
Chapter 15 Questions:
47. Under 80% rule, The basis of the stock in the hands of the shareholder is equal to the basis of the property contributed, plus any gain recognized, minus any boot received (including relief of liabilities). A. Contribution of property with a basis of $1,000 and a FMV of $1,400.
$1,000 basis. B. Contribution of property with a basis of $3,000 and a FMV of $3,800. The