Question

On July 1 of the current year, Bertram acquired a 25 percent interest in Sycamore Company, a partnership, by contributing property with an adjusted basis of $7,000 and a fair market value of $12,000. The property was subject to a mortgage of $8,000, which was assumed by Sycamore Company. What is Bertram's basis in his partnership interest in Sycamore Company immediately after the partnership contribution?a.$12,000b.$1,000c.$7,000d.$0e.None of these choices are correct2-Phil and Bill each own a 50 percent interest in P&B Interests. P&B Interests has ordinary income for the year of $35,000 before guaranteed payments to Phil. If Phil receives guaranteed payments of $20,000 during the tax year, what is the total income or loss that should be reported by Bill from the partnership for this tax year?a.$7,500 incomeb.$25,000 incomec.$5,000 incomed.$30,000 incomee.None of these choices are correct.3-Jamie decides to contribute cash and property to a partnership she and her friends started. She contributes a building worth $260,000 that has an adjusted basis of $100,000 and she also contributes $40,000 in cash. What is her basis in the partnership?a.$300,000b.$100,000c.$140,000d.$260,000e.None of these choices are correct.

Answer 1

Answer: See explanation

Step-by-step explanation:

A. What is Bertram's basis in his partnership interest in Sycamore Company immediately after the partnership contribution?

= Bertram share % × (Fair market value - Mortgage)

= 25% × ($12000 - $8000).

= 25% × $4000

= 0.25 × $4000

= $1000

2. The total income or loss that should be reported by Bill from the partnership for this tax year will be:

= 50% × ($35000 - $20000)

= 50% × $15000

= $7500

3. Jamie basis in the partnership will be:

Building = $260000

Add: Cash contribution = $40000

Total = $300000