Week Four Individual Assignment ACC 455

Week Four Individual Assignment ACC 455

Instructions:

This assignment has four problems. You will find the problems one on each tab below listed f
You click on each numbered tab to complete the particular problem.
The partnership questions come from CH 9 WK4 textbook readings.
The S corporation questions come from CH 11 WK4 textbook readings.
You want to complete the problems in this spreadsheet and turn in one file only.

ow listed from #1 through #4.

FACTS
Vine Inc purchases a 20% interest in Delta LP (a Limited Partnership) interest (taxed as a tax partnership) for $10 Million cash a
Delta LP had $0 Million debt at the beginning of 2014 and $8 Million at year end 2014. Partners share in debt based on their ca
Delta LP reported $5 Million Taxable Income for 2014 and Vine received a 20% distributive share of the income.
Delta LP made $2 Million cash distribution to partners in 2014 and Vine recieved 20%.

QUESTION
Compute the year end 2014 tax basis Vine Inc has in Delta LP.

Solution

n cash at the beginning of 2014.
their capital and profit interest.

FACTS

Joel, Boot Inc, Julie, and Mavon LLC fom a Limited Partnership (zz LP) and the entity uses tax partnership for tax purp

Joel contributes $2 Milion cash.
Boot Inc contributes intellectual property (IP) with a $12 Million FMV and $1,500,000 tax cost. The IP has a $2 Million
Julie contributes a patent with $2 Million FMV and $500,000 tax cost.
Mavon LLC contributes a building with $7 Million FMV and $3 Million Tax Cost with a $1 Million Loan attached.

Joe has a 10% interest, Boot Inc has a 50% interest, Julie has a 10% interest, and Mavon LLC has 30% interest in the t

Question
You are to compute a FMV and tax cost balance sheets for zz LP at formation date using the above information.
The balance sheet one requires a listing of assets, debt and capital accounts for each tax partner at FMV.
The balance sheet two requires a listing of assets, debt and capital account for each tax partner at tax cost.
Or, you can do one balance sheet and place the FMV accounts and Tax cost accounts in separate columns.

or tax purposes.

a $2 Million loan attached that also gets contributed to the tax partnership.

ed.

rest in the tax partnership (interest here for all is defined as an interest in capital and profits).

ation.

t.

FACTS
Once you compute the tax cost balance sheet in #3, you can solve this problem.
As, you use the same fact situation from #2.
Question
Below, you compute the adjusted tax cost (basis) of Boot Inc's interest in the tax partnership.

FACTS

Pecan Inc. (operating as a tax S corporation) is in its first year of operations. We are now at the end of the year.
Pecan Inc. has two shareholders:
Daniel owns 400 shares and Monica owns 600 shares. The
The corporation received $1,000,000 total from the shareholders for their shares. Thus, the shareholders paid $1,000
Peacn Inc. has the following transactions for the year.
Revenues
Salary Expense
Technology Lease Expense
Consulting Fees Expense
Net Short Term Capital Gain
Charitable Contribution
Total Cash Distributions to
Shareholders

$1,000,000
$125,000
$350,000
$75,000
$100,000
$25,000
$80,000

Questions
Compute
Compute
Compute
Compute
Compute

the total ordinary income for Peacn Inc.
the separately stated items for Pecan Inc.
Monica's share of the ordinary income
Monica's share of the separately state items
Monica's year end tax cost (basis) in her shares

. The two shareholders have owned the shares the full year.
1,000 cash per share.