On December 31, Year 2, Samantha, Jennifer, and Priscilla formed MB Partnership. The partners contributed...
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Accounting
On December 31, Year 2, Samantha, Jennifer, and Priscilla formed MB Partnership. The partners contributed the following upon formation of the partnership:
Samantha contributed $50,000 for a 20% share of MB.
Jennifer contributed a building for a 40% share of MB. The building had a FMV of $200,000 on the date of contribution and an AB of $70,000 for Jennifer. The building was subject to a $140,000 recourse mortgage, which was assumed by the partnership.
Priscilla contributed $25,000 cash and accounting services with a fair market value of $8,333 for a 40% share of MB.
Additional information:
During Year 3, MB had net income of $150,000.
During Year 3, Samantha contributed an additional $10,000 in cash to MB.
During Year 3, Priscilla received a distribution of $5,000.
Enter the amount of the partner's initial basis, the net amount of adjustments made to the partner's basis, and the partner's basis at the end of Year 3 using the information above. Enter the appropriate amounts in the designated cells below. Enter all amounts as positive values. Round answers to the nearest dollar. If no entry is necessary, enter a zero (0).
Samantha
Jennifer
Priscilla
Initial basis
Adjusted basis
Answer & Explanation
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