1a. Jay contributes property with a fair market value of $16,000 and an adjusted basis of $5,000 to a partnership in exchange for an 8 percent partnership interest.
a. Calculate the amount of gain recognized by Jay as a result of the transfer of the property to the partnership.
b. Calculate Jay’s basis in his partnership interest immediately following the contribution to the partnership.
1b. Wilson has a 40 percent interest in the assets and income of the CC&W Partnership, and the basis in his partnership interest is $45,000 at the beginning of 2016. During 2016, the partnership’s net loss is $60,000 and Wilson’s share of the loss is $24,000. Also, Wilson receives a cash distribution from the partnership of $12,000 on June 30, 2016.
a. Indicate the amount of income or loss from the partnership that should be reported by Wilson on his 2016 individual income tax return.
b. Calculate Wilson’s basis in his partnership interest at the end of 2016.
1c. Louise owns 45 percent of a partnership, and her brother owns the remaining 55 percent interest. During the current tax year, Louise sold a building to the partnership for $160,000 to be used for the partnership’s office. She had held the building for 3 years, and it had an adjusted basis of $120,000 at the time of the sale. What is the amount and nature of Louise’s gain on this transaction?