Question

Nadia contributed cash of $20,000 to form the USSR Partnership. At the same time, Elena contributed land worth $20,000 (her basis was $5,000 at the time of contribution). They both received a 50% capital and profits interest. Shortly after the partnership was formed, USSR sold the land for $22,000. How is the gain on the sale of the land allocated to the partners

Answer 1

Answer:Elena $16,000; Nadia $1,000

Step-by-step explanation:

The built-in gain of $15,000 must be allocated to the contributing partner. The remaining gain of $2,000 is shared in accordance with the profit and loss sharing ratios.