Question

Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $22,000 of cash and land with a FMV of $67,000. Her basis in the land is $32,000. Andrew contributes equipment with a FMV of $24,000 and a building with a FMV of $45,000. His basis in the equipment is $20,000, and his basis in the building is $32,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew?

Answer 1

Answer: $0

Step-by-step explanation:

The amount of gain that the SA general partnership must recognize on the transfer of these assets from Sue and Andrew will be $0.

As Per Section 721a, there'll be no gain or loss that'll be recognised to any partner in case there's a property contribution to the partnership.

Therefore, no gain will be recognized in this situation.