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linda_us
linda_us, Master's Degree
Category: Multiple Problems
Satisfied Customers: 1402
Experience:  A tutor for Business, Finance, Accounts and other related topics.
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There is an assignment posted that is similar to the one I

Customer Question

There is an assignment posted that is similar to the one I am working on but I do not understand some of the concepts.
The question was submitted two years ago.
Here is the link to the answers https://app.box.com/s/xra4xpg83r1uirv8dabx is the link to my responses.
I was never able to reach them, but some of the answers I did not understand how they were calculated.
1. 1) How much gain or loss do each of the partners and the partnership recognize on the
formation of the partnership? Alisa $0, John $0. Victoria recognizes $100,000 ordinary income under IRC 83. Partnership $0.
Why would Victoria recognize $100,000 ordinary income. It seems Victoria contributed a receivable with a FMV of $100,000. Does a contributing an unrecognized receivable trigger a gain that needs to be recognized by the partner?
2) What is each partner’s basis in his/her partnership interest? Alisa $500,000. John ($300,000-(50%*500,000 debt relief=))$50,000. Victoria $50,000.
I understand that Alisa's basis and John's basis, but here's where my understand goes south. If Victoria's basis is $50,000 due to having to recognize 10% of the $500,000 mortgage, then why doesn't Alisa's basis include her 40% of the mortgage?
Submitted: 9 months ago.
Category: Multiple Problems
Expert:  F. Naz replied 9 months ago.

Hello

This is your assignment question or practice question?

Customer: replied 9 months ago.
The assignment answers were posted for the exact assignment that I have, but I don't understand how the answers were calculated. Here is the assignment:Alisa, John and Victoria form the AJV general partnership. The initial contributions of each and their percentage interests in the capital and profits of the partnership are as follows:
John contributed land with a fair market value (“FMV”) of $1,000,000 subject to a recourse mortgage of $500,000. John’s adjusted basis in the land was $300,000 at the date of contribution to the partnership. Therefore, the liability on the land exceeds the tax basis in the land.
Pursuant to Treasury Regulation Section 1.752-2, the partners share all partnership recourse liabilities (including the mortgage on the land) in accordance with their respective interests in the partnership. The partnership is a general partnership and has assumed the mortgage on the land, as such John has rights of contribution against his fellow partners under state law.
Prior to formation, Victoria had negotiated the lease commitment for her own benefit. Furthermore, Alisa has used the equipment in her business operated as a sole proprietorship. John has held the land for investment purposes.Here is the answer to the first 2 questions on the site:1) How much gain or loss do each of the partners and the partnership recognize on the
formation of the partnership? Alisa $0, John $0. Victoria recognizes $100,000 ordinary income under IRC 83. Partnership $0.
2) What is each partner’s basis in his/her partnership interest? Alisa $500,000. John ($300,000-(50%*500,000 debt relief=))$50,000. Victoria $50,000.I do not understand if Victoria is contributing a receivable in the amount of $10,000 why she needs to recognize a gain at the formation of partnership. Also, if Victoria basis in question 2 is $50,000 for absorbing 10% of the mortgage liability contributed by John, then why doesn't Alisa's basis answer recognize her 40% of the liability?
Customer: replied 9 months ago.
Victoria's contributed receivable is $100,000 not $10,000
Customer: replied 9 months ago.
I calculate $0 gain or loss for all the partners and the partnership.In #2, I calculate Alisa's basis as $500,000 + $200,000 in assuming 40% of the $500,000 liability totaling $700,000. John's basis would be $300,000 less 50% of the $500,000 liability totaling $50,000 basis. Victoria's basis would be 10% of the $500,000 liability totaling $50,000.
Expert:  F. Naz replied 9 months ago.

Hello

So you want to understand the calculation only and you have the answers already?

Customer: replied 9 months ago.
I need to know the correct answer and how it is calculated.
Expert:  F. Naz replied 9 months ago.

So you do not have correct answers? and you want me to provide you correct answers so you can use them in your assignment and get up grades?

Customer: replied 9 months ago.
what exactly did I pay for?
Customer: replied 9 months ago.
Never mind. Please refund the money that I paid.
Expert:  F. Naz replied 9 months ago.

You pay to take help not to use the solution of mine to use for your assignments, thanks.

Expert:  F. Naz replied 9 months ago.

I am opting out from this question so your question will be visible to other experts, thanks.

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