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Taxation

U.S Tax laws apply

Kevin, Gerald and Robb formed HyperTech Systems, LLC. No election was made as to the status of this entity, as they wanted to leave it as a partnership. Kevin and Robb contributed $245,000 to the partnership. Gerald contributed the following assets:

Asset

Basis

Fair Market Value

Cash

$15,000

$15,000

Land

$120,000

$440,000


$135,000

$445,000


  1. What is the tax basis of Kevin and Robb in the partnership?


  1. Assume Gerald is asking for an equal part in the partnership in terms of capital? What will be the tax effects to Gerald?


  1. Assume Gerald is asking for an equal share in the partnership in terms of profits and losses only. What are the tax effect to Kevin, Robb and Gerald?


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