Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $12,000 of cash and land with a FMV of $57,000. Her basis in the land is $22,000. Andrew contributes equipment with a FMV of $14,000 and a building with a FMV of $35,000. His basis in the equipment is $10,000, and his basis in the building is $22,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew?

Question

Madilynn Graves

Business

30 April, 02:10

Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $12,000 of cash and land with a FMV of $57,000. Her basis in the land is $22,000. Andrew contributes equipment with a FMV of $14,000 and a building with a FMV of $35,000. His basis in the equipment is $10,000, and his basis in the building is $22,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew?

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Boston Watson · Answer 1

NONE

Explanation:

The gain will be recognize in favor of Sue and Andrew. Not the partnership

Sue will have his capital gain for the land

and Andrew for the equipment and the building.

But the parthnership will only enter the assets it will not earn anything:

cash 12,000

land 57,000

equipment 14,000

building 35,000

sue capital account 69,000

andrew capital account 49,000