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rbp partnership is a service oriented partnership that has three equal general partn 699230

RBP Partnership is a service oriented partnership that has three equal general partners. One of them, Barry, sells his interest to another partner, Dale, for $90,000 of cash and the assumption of Barry’s share of partnership liabilities. On the sale date, the partnership’s cash basis balance sheet is as follows. Assume that the capital accounts before the sale reflect the partners’ bases in their partnership interests, excluding liabilities. The payment exceeds the stated fair market value of the assets because of goodwill that is not recorded on the books.

 

Basis

FMV

 

Basis

FMV

Cash

$120,000

120,000

Note payable

$ 30,000

$ 30,000

Accounts receivable

–0–

90,000

Capital accounts

 

 

Capital assets

30,000

75,000

Barry

40,000

85,000

 

 

 

David

40,000

85,000

 

 

 

Dale

40,000

85,000

 

 

 

Total

$150,000

$285,000

Total

$150,000

$285,000

 

 

 

a. What is the total amount realized by Barry on the sale?

b. How much, if any, ordinary income must Barry recognize on the sale?

c. How much capital gain must Barry report?

d. What is Dale’s basis in the partnership interest acquired?

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