Kay and Larry Each Contribute Property to Become Equal Partners

question 72

Essay

Kay and Larry each contribute property to become equal partners in the KL General Partnership. Kay contributes office furniture with an adjusted basis of $40,000 and an FMV of $50,000, which she has depreciated using MACRS. Larry contributes land with a basis of $60,000 and an FMV of $50,000, which he had been holding as an investment. The partnership will use the land as a parking lot for their business.
a)What is the partnership's basis in each of the two pieces of property?
b)If the land that Larry contributed is sold four years after the contribution for $45,000, what is the amount and character of the gain or loss which Larry should report?

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Definitions:

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A condition where the heart's blood vessels, the coronary arteries, are damaged or diseased, often leading to heart attacks.

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A medical condition characterized by excess body fat that increases the risk of health problems.

Lipid Profile

A blood test that measures the levels of triglycerides, total cholesterol, HDL cholesterol, and LDL cholesterol, providing information about cardiovascular risk.

Coronary Heart Disease

A condition characterized by narrowing of the coronary arteries, which supply oxygen and blood to the heart, leading to heart attacks and other heart-related issues.