Question - Anne contributes property to the TCA Partnership which was formed 8 years ago by Clark and Tara. Anne's basis for the property is $90,000 and the fair market value is $220,000. Anne receives a 25% interest for her contribution. Because the TCA Partnership is unsuccessful in having the property rezoned from agricultural to commercial, it sells the property 14 months later for $225,000.
a. Determine the tax consequences to Anne and to the partnership on the contribution of the property to the partnership.
b. Determine the tax consequences to Anne and the other partners on the sale of the property.
c. Would the tax consequences in b. differ if the entity were an S corporation?