Answer:
Consider the following calculations
Explanation:
a. Liz: Gain = $90,000 - $75,000 = $15,000
John: Gain = $170,000 - $20,000 = $150,000
Partnership: The total value of property received
b. As per section 721, There is no gain or loss is recognized by partnrhsip or other partners on formation of the entity.
c. Liz: Substituted basis = $80,000 + $75,000 = $155,000
John: Substituted basis = $20,000 i.e. in equipment
d. Partnership LZ : Carry over basis = $80,000 + $75,000 + $20,000 = $175,000
e. No, there is no diffrence.
Inside basis : $80,000 + $75,000 + $20,000 = $175,000
Partners