Jed Castanza transfers $90,000 of cash to the JN partnership for a 60 percent interest in the JN partnership. Ned transfers a building with an adjusted basis of $30,000 and a fair market value of $100,000, subject to a debt of $40,000 that the partnership assumes, in exchange for a 40 percent interest in the JN partnership. Determine each partner's adjusted basis in his partnership interest. Does either partner recognize any gain on the transfer to the partnership

Question

Schultz

Business

12 December, 21:46

Jed Castanza transfers $90,000 of cash to the JN partnership for a 60 percent interest in the JN partnership. Ned transfers a building with an adjusted basis of $30,000 and a fair market value of $100,000, subject to a debt of $40,000 that the partnership assumes, in exchange for a 40 percent interest in the JN partnership. Determine each partner's adjusted basis in his partnership interest. Does either partner recognize any gain on the transfer to the partnership

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Landin Cruz · Answer 1

Their basis will be 90,000 for Mr Castanza

and 60,000 for Ned

Also Ned will recognize a capital gain for 70,000 when performing the transfer of the property. As his adjusted basis is 30,000 while the property value is 100,000

Explanation:

Mr Castanza

90,000 = 60%

Ned

100,000 - 40,000 = 60,000 = 40%

Total capital

90,000 + 60,000 = 150,000 = 100%

Check for difference:

90,000/150,000 x 60% = 90,000

60,000/150,000 x 40% = 60,000

Their basis will be 90,000 for Mr Castanza

and 60,000 for Ned

Also Ned will recognize a capital gain for 70,000 when performing the transfer of the property. As his adjustedbasis is 30,000 while the property value is 100,000