Question

AB Corporation and YZ Corporation formed a partnership to construct a shopping mall. AB contributed $641,000 cash, and YZ contributed land ($641,000 FMV and $571,000 basis) in exchange for a 50 percent interest in ABYZ Partnership. Immediately after its formation, ABYZ borrowed $320,500 from a local bank. The debt is recourse (unsecured by any specific partnership asset). 1. Compute each partner's initial basis in its partnership interest, assuming that both AB and YZ are general partners. 3. Compute each partner's initial basis in its partnership interest, assuming that AB is a general partner, and YZ is a limited partner. Complete this question by entering your answers in the tabs below. Required A Required B Compute each partner's initial basis in its partnership interest, assuming that AB is a general partner, and YZ is a limited partner. AB's initial basis YZ's initial basis

Answer 1

1 Aarver Gegedland Limited Paulager Gejal Partner General Brtoer is the active.partner in the partnership. He has fyll coghol over the operations. of the organisationsHe_has_uglimited Jigility in the babyeishije meyon.at the time of Jigyldigting, the || Outsiles. vetyin_their... money own._.10_partnership by selling personit | quispe B of generyl_parlt)ex.Outsiders 549_-make responsible general Partner for qboy£fly quexqlyog.s._of_partnership for gay defyyl limited (artiges Limited_latory is also know11.95 sleeping partner in the pentgenshie He has not fill byt a minimal control over the operations of the partnership. He has limited liability uph the share of his in the firm_04551deas_499901 mphe responsible for limited_partner about the operations of the partnership for any default 1 comentation of Each_partners initial basis_inits paxtgenstep bevest, qis4912, both_AB_and_yz_q8€ q_general_pop brew's It is given_thal, AB and Y2 ave_general partners, which shows AB and iz are equally responsible for the outsiders bana loan taken by the ABY 2 Partnership

Calulation of Initial Busils of both Partners --_Assymiy_both ave Gene_ql_Pavlness Y2 Corporation - Particy) go5 - AB's contribytes Cash Y2's contribybed land AB Corporation 641000 571000 Equal Share of becourse Debt 160250 I (320500 x 50% 160250 (3200000 so%) Initial Basis: 801250 731250 13 Computation of Each partner's initial basis gjymlag this AB 75 general peitper aqd_Y2 15_limited partners - It is given Haqt, AB is gegcool parties 944-yz is limited parbres. As per the explanation given above general partner is responsible for the operations of partnership qold the outsiders questions on the partnership. Therefore is only responsible for the bank loan borrowed by the ABY 2 Parlone. ship. Calalation of Initial Basis assuming AB & Yz is general ant limiter perliner resp. Partjullaus AB Corporation L Y2 Corporation AB's con brilbybel cosch 644000 Y2's Gawibylel lant - 57000 320500 | AB's Share of recourse Debt 1 Y2's shque of fecourse best 96500 Lo Initial Busis 571000 FMV of land contributed by Y2 Corporation is not taken in consideration as the bags of such land forms in the Partnership is already given