Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Partnership A invests $ 35K into Partnership B and now Partnership

A owns 50% of Partnership...
Partnership A invests $ 35K into Partnership B and now Partnership A owns 50% of Partnership B.

What is the proper way to book the investment on Partnership A's balance sheet? Asset or Equity(Capital Contribution in calculating inside/outside basis)?
Show More
Show Less
Ask Your Own Tax Question
Answered in 28 minutes by:
10/8/2013
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,854
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Lane :

Debit Cash and credit Owner's equity. It's both (Unless you'rem paying down debt ... Then it's debit Cash, credit the liability)

Lane :

The partnership's basis in its assets for tax purposes is called the inside basis. The outside basis is the value of the partner's interest in the partnership. The outside basis consists of the partner's capital account for tax purposes and the partner's share of partnership liabilities. The inside basis for the partnership is generally equal to the total of each partner's outside basis.

Customer:

Maybe I should simplify my question:

Lane :

Inside basis will allocate that investment to, say, equipment, or the depreciater val of abuilding ... but what you've describesw is really just an outside basis issue (this partner;s interest in the partnership

Lane :

k

Lane :

still with me?

Customer:

When Partnership A is investing in and writing checks to Partnership B for investment expense in wells - The JE on Partnership A's books should be Credit the bank and debit what? Asset (Investment in Wells) or Capital Contribution in Equity?

Lane :

the Capital account ... unless you want it to look as if Partnership A actually has the well expense

Lane :

Ideally this should credit cash (bank) and debit capital. Then for Ptnr B (if the wells aren't a capit l asset) ... Ptnrship B take the expense

Customer:

Perfect, this is what I was looking for. I picked up an account that had the investment listed as an asset and I thought it belonged in equity.

Lane :

Yes, then B uses the cash to expense the well purchase IF it isn't capitalized - Credit B's Cash and debit the expense

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,854
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now

Hi Joan,

... just checking back in here, as I never saw you come into the chat.

Let me know if I can help further

Lane
Ask Your Own Tax Question
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,854
12,854 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
A piece of family property was placed into a partnership
A piece of family property was placed into a partnership with my 3 older siblings some time ago. Because my younger brother and I were minors at the time, we were not included in ownership. At this ti… read more
RD
RD
Self Employed
Master's Degree
1,164 satisfied customers
For a ny state partnership tax return, if you file an
For a ny state partnership tax return, if you file an extension but don't pay anything and then end up owing a lot. Do they still recognize the extension or do they charge a failure to pay penalty (fo… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,854 satisfied customers
Tax Experts Rental building was purchased by partnership
Tax ExpertsRental building was purchased by partnership (LLC). Ownership structure is 50% A, 25% B, 25% C. B and C will be replaced with a new owner D (single member LLC). New owner will pay off B and… read more
socrateaser
socrateaser
1,031 satisfied customers
I have an LLP (limited liability partnership) with an
I have an LLP (limited liability partnership) with an operating agreement that indicates it's organized as a general partnership. I am the designated 'tax matters partner'. The *other* partner is resp… read more
abci168
abci168
Principal
27 satisfied customers
I purchased an asset in 2013 and sold like kind asset 2016
I purchased an asset in 2013 and sold like kind asset 2016 can we use the like kind exchange on this purchase sale? the asset we sold was used as collateral for the asset purchased in 2013 … read more
abci168
abci168
Principal
27 satisfied customers
Question regarding taxation of partnership distributions and
Hi, question regarding taxation of partnership distributions and capital gains … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,310 satisfied customers
I am 50% partner in an LLC, taxed as partnership (form
I am 50% partner in an LLC, taxed as partnership (form 1065). The other 50% partner is my friend. This LLC's only assets were 2 single family houses, which we rented out. In 2016 we have sold both of … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I (US person) own 50% in a foreign partnership (real estate
I (US person) own 50% in a foreign partnership (real estate partnership under civil law (GbR) in Germany), the other 50% are held by a none US person. - I have rental income from the foreign partnersh… read more
taxmanrog
taxmanrog
Master\u0027s Degree
698 satisfied customers
We are interested in buying a solar farm. What are the tax
Hi! We are interested in buying a solar farm. What are the tax incentives? Is it just the 30% tax credit, or will we get to depreciate all the solar equipment with bonus depreciation? Thanks! … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
An S Corporation is selling its assets under an Asset
An S Corporation is selling its assets under an Asset Purchase Agreement. The 2 stockholders materially participate in the operation of the business. The business provides credit card processing softw… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,854 satisfied customers
If I buy a house using my LLC (for limited liability since
If I buy a house using my LLC (for limited liability since I'll rent out part of the house) and use it as my primary residence, do I still get to deduct the mortgage interest against my personal incom… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Company A transferred assets and liabilities to a newly
Company A transferred assets and liabilities to a newly formed Company B … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am preparing a partnership tax return for 2016. The
I am preparing a partnership tax return for 2016. The partnership holds commercial rental property. one of the partners, 50%owner, passed away in April 2016 and left his interest to his spouse. i woul… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
A limited liability partnership was owned by a trust cfeated
A limited liability partnership was owned by a trust cfeated by the former owner. At the former owners death, the trust required termination of the trust distribution of the partnership interest equal… read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
285 satisfied customers
I have a question regarding capital accounts, distributions,
I have a question regarding capital accounts, distributions, and proceeds of a portion of shares of a K1. … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I have an LLC taxed as a partnership with 2 general partners
I have an LLC taxed as a partnership with 2 general partners owning 50% each. They want to sell half of their interest to new incoming partners. Thus the existing partners will go down to 25% each and… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,854 satisfied customers
Can afamily partnership incorporate as a Limited Liability
Can afamily partnership incorporate as a Limited Liability Company and still file its taxes as a partnership? Does a family partnership that becomes an LLC have to file an IRS form to continue to file… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Partnership sold the assets inside of it and now they
Partnership sold the assets inside of it and now they closing it. Once of the partners has take a distribution in excess of his basis and is showing a negative in his capital account. This would be a … read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x