The equal XYZ Partnership has the following balance sheets: Basis FMV Cash $54,0
ID: 2375746 • Letter: T
Question
The equal XYZ Partnership has the following balance sheets: Basis FMV Cash $54,000 $54,000 Land $21,000 $42,000 Unrealized Receivables $0 $15,000 Collectibles $3,000 $9,000 $78,000 $120,000 Liabilities $30,000 $30,000 Capital, X $12,000 $30,000 Capital, Y $18,000 $30,000 Capital, Z $18,000 $30,000 $78,000 $120,000 XYZhas a Code Section 754 election in effect, and X sells her interest to W for $30,000 cash. However, the land was contributed by X at a time when its FMV exceeded its basis by $6,000. How much is the Code Sec. 743(b) adjustment? The equal XYZ Partnership has the following balance sheets: Basis FMV Cash $54,000 $54,000 Land $21,000 $42,000 Unrealized Receivables $0 $15,000 Collectibles $3,000 $9,000 $78,000 $120,000 Liabilities $30,000 $30,000 Capital, X $12,000 $30,000 Capital, Y $18,000 $30,000 Capital, Z $18,000 $30,000 $78,000 $120,000 XYZhas a Code Section 754 election in effect, and X sells her interest to W for $30,000 cash. However, the land was contributed by X at a time when its FMV exceeded its basis by $6,000. How much is the Code Sec. 743(b) adjustment?Explanation / Answer
Basis FMV
Cash $30,000 $30,000
Inventory $30,000 $40,000
Land A $35,000 $20,000
$95,000 $90,000
X had a basis in her partnership interest of $75,000, so the land%u2019s basis was reduced $20,000 and had only a $15,000 basis in X%u2019s hands. The remaining YZ partnership (which did have a Code Sec. 754 election in effect) had the following remaining assets:
Basis FMV
Cash $40,000 $40,000
Inventory $30,000 $45,000
Unrealized Receiv. $50,000 $45,000
Land B $25,000 $40,000
Building $45,000 $10,000
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