ACCT 540 Assignment 8 Mary and Todd form the MT Partnership, with a transfer of...
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Accounting
ACCT 540 Assignment 8
Mary and Todd form the MT Partnership, with a transfer of the following properties:
Mary $2,300,000 cash
Todd $2,300,000 FMV property
$1,100,000 tax basis
Both Mary and Todd receive a 50% interest in the partnership. They have an agreement that allocates all profits and losses 50% to each member. They also have language in their partnership agreement that satisfies the alternate test for economic effect.
REQUIRED:
Show the book (704b) and tax basis capital account entries for both Mary and Todd at formation of the partnership.
Assume that Todds contributed property is later sold for $4,800,000. No depreciation deductions were claimed. Show the allocation of the book and tax gain from this sale, and explain which one will be reflected on the tax return of the partnership.
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