Answer:
See the explanation below:
Explanation:
a. How is the land recorded for § 704(b) book capital account purposes? For § 704
Debit cash with $170,250
Debit land with $340,500
Credit Nova's Capital account with $510,750
b. What is Padgett's tax basis in the land?
Padgett's tax basis in the land is $85,125 that is carried over.
c. If Padgett sells the land several years later for $510,750, how much tax gain will Nova and Oscar report?
Built in gain = $340,500 - $85,125 = $255,375
Gain from sale = $510,750 - $340,500 = $170,250
Share of gain from sale = $170,250 * 50% = $85,125
Gain to report by Nova = Built in gain + Share of gain from sale = $255,375 + $85,125 = $340,500
Gain to report by Oscar = Share of gain from sale = $170,250 * 50% = $85,125
