Mary and Scott formed a partnership that maintains its records on a calendar-year basis. The balance sheet of the MS Partnership at year-end is as follows: Cash Land Inventory Mary Scott Basis $24 108 60 $ 192 $ 96 96 $192 Fair Market Value $24 180 36 $ 240 $ 120 120 $240 At the end of the current year, Kari will receive a one-third capital interest only in exchange for services rendered. Kari's interest will not be subject to a substantial risk of forfeiture, and the costs for the type of services she provided are typically not capitalized by the partnership. For the current year, the income and expenses from operations are equal. Consequently, the only tax consequences for the year are those relating to the admission of Kari to the partnership. Note: Leave no answer blank. Enter zero if applicable. Do not round intermediate calculations. Gain or loss recognized d. Calculate how much gain or loss Kari would have to recognize if, instead of a capital interest, she received a profits interest. as

Mary and Scott formed a partnership that maintains its records on a calendar-year basis. The balance sheet of the MS Partnership at year-end is as follows: Cash Land Inventory Mary Scott Basis $24 108 60 $ 192 $ 96 96 $192 Fair Market Value $24 180 36 $ 240 $ 120 120 $240 At the end of the current year, Kari will receive a one-third capital interest only in exchange for services rendered. Kari's interest will not be subject to a substantial risk of forfeiture, and the costs for the type of services she provided are typically not capitalized by the partnership. For the current year, the income and expenses from operations are equal. Consequently, the only tax consequences for the year are those relating to the admission of Kari to the partnership. Note: Leave no answer blank. Enter zero if applicable. Do not round intermediate calculations. Gain or loss recognized d. Calculate how much gain or loss Kari would have to recognize if, instead of a capital interest, she received a profits interest. as

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter10: Partnership Taxation

Section: Chapter Questions

Problem 14MCQ

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