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On June 1 of the current tax year Elisha and Ezra (who are equal partners) contribute property to form the Double E Partnership. Elisha contributes cash of $456,480. Ezra contributes a building and land with an adjusted basis and fair market value of $760,800, subject to a liability of $304,320. The partnership borrows $47,550 to finance construction of a parking lot in front of the building. At the end of the first year (December 31), the accrual basis partnership owes $19,020 in trade accounts payable to various creditors. The partnership reported net income of $71,325 for the year, which they share equally. Assume that Elisha and Ezra share equally in partnership liabilities. How much is Elisha's basis in the partnership interest on December 31? Ezra's? Round interim and final answers to whole dollars.

Elisha's basis: $ 677588

Ezra's basis: $ 677588

Respuesta :

Answer:

Elisha Basis in Partnership is $ 677,588.

Ezra Basis in Partnership is $ 677,588.                                                            

Explanation:

Partnership is kind of business where two or more person contributes capital according to agreed ratio and share profit and losses according to agreement of partnership called partnership deed.

Partnership basis can be calculated as follows:

Elisha Basis in Partnership

Description                                            Amount

Contribution in Cash                              456,480

+ Contributed Land liability share          152,160  ---- (304320/2)

+ Construction debt share                       23,775  ----- (47550/2)

+ Account Payable Share                         9,510  ----- (19020/2)

+ Net Income Share                                 35,663 --- (71325/2)

Elisha basis in Partnership                        $ 677588

Ezra Basis in Partnership

Description                                            Amount

Building & Land                                     760,800

- Debt of partnership                             (304320)  

+ Contributed Land liability share          152,160  ---- (304320/2)

+ Construction debt share                       23,775  ----- (47550/2)

+ Account Payable Share                         9,510  ----- (19020/2)

+ Net Income Share                                 35,663 --- (71325/2)

Ezra basis in Partnership                        $ 677588    

     

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