Question

AB Corporation and YZ Corporation formed a partnership to construct a shopping mall. AB contributed $503,000 cash, and YZ contributed land ($503,000 FEMV and $433,000 basis) in exchange for a 50 percent interest in ABYZ Partnership. Immediately after its formation, ABYZ borrowed $251,500 from a local bank. The debt is recourse (unsecured by any specific partnership asset). a. Compute each partner's initial basis in its partnership interest, assuming that both AB and YZ are general partners. b. 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 both AB and YZ are general partners. AB's initial basis YZ's initial basis

Answer 1

1.Computation of each partners initial basis in its partnership interest assuming that both are general partners.

Partners	Initial Basis	Notes
AB's	$628750	1
YZ's	$558750	2

Note 1.

Cash Contributed by AB	$503000
ADD:Portion of the loan treated as loan contributed by AB	$125750
Total	$628750

Note 2

Asset contributed by YZ	$433000
ADD:Portion of the loan treated as loan contributed by YZ.	$125750
Total	$558750

1.Computation of each partners initial basis in its partnership interest assuming that AB is general partners And YZ is limited partner,

Partners	Initial Basis	Notes
AB's	$754500	1
YZ's	$433000	2

Note 1.

Cash Contributed by AB	$503000
ADD:Portion of the loan treated as loan contributed by AB	$251500
Total	$754500

Note 2

Asset contributed by YZ	$433000
ADD:Portion of the loan treated as loan contributed by YZ.	$0.00
Total	$433000