Question

Corporation A and Corporation Z go into partnership to develop, produce, and market a new product. The two corporations contribute the following properties in exchange for equal interests in AZ Partnership: Corporation A Corporation Z Cash $ 100,000 $ 50,000 Business equipment (FMV) 30,000 80,000 Corporation A’s tax basis in the contributed equipment is $34,000, and Corporation Z’s tax basis in the contributed equipment is $12,000. Compute each corporation’s realized and recognized gain or loss on the formation of AZ Partnership. Compute each corporation’s tax basis in its half interest in AZ Partnership. Compute the partnership’s tax basis in the equipment contributed by each corporate partner.

Answer 1

You didn´t post the complete information of the exercise, I searched the exercise online and tried to ask the most useful question.

Step-by-step explanation:

a. Corporation A realized a $4.000 loss, and Corporation Z realized a $68.000 gain on the contribution of business equipment to AZ partnership. Neither corporation recognizes gain or loss.

b. A's basis in it's one-half equity interest in AZ Partnership is $134.000, while Z's basis in it's one-half equity in AZ partnership is $62.000.

c. AZ partnership's basis in the equipment contributed by A is $34.000 and in the equipment contributed by B is $12.000.