Question

eBook Calculator Exercise 21-21 (b) (LO. 8) When Goodman Biotech LLC was formed, Ezra contributed land (value of $198,000 and basis of $172,000) and $28,000 cash, and Liam contributed a patent (value and basis) of $226,000. Both partners received a 50% Interest in partnership profits and capital. a. How is the land recorded for $ 704(b) book capital account purposes? For $ 704(b) book capital account purposes, Goodman Biotech records the land at $ b. What is Goodman Biotech's tax basis in the land? c. If Goodman sells the land several years later for $408,000, Ezra reports a g ain and Lam's gain is

Answer 1

Answer As per the given data cord contributed land [value of $198000 basis of $ 172000 and 28000 cash] patot both value and eram contributed basis of $226000 50% Interest rest in in Partnership partnersh profits and capital were received by both- Journal entry of Dak Particular Amtoi) Ant (4) land ale Dr cash acc Dr 198000 28000 . To ezra's capital 1226000 (to record the capital) land value will be recorded $198000 so er here the as 6) The Goodman biotech's tax basis an eand will be $ 172000 carry over basis. c) Ezra's gain is 26000 bullin gain calculated as + (4 08000 - 198000) x 50% 131 000

so Ezra will report $131000 gaid Next liam gain is Cuosooo - 198000) x 50% = 105000 liam gain will be $ 105000