Question

AB Corporation and YZ Corporation formed a partnership to construct a shopping mall. AB contributed $641,000 cash, and YZ contributed land ($641,000 FMV and $571,000 basis) in exchange for a 50 percent interest in ABYZ Partnership. Immediately after its formation, ABYZ borrowed $320,500 from a local bank. The debt is recourse (unsecured by any specific partnership asset).

1. Compute each partner’s initial basis in its partnership interest, assuming that both AB and YZ are general partners.
2. Compute each partner’s initial basis in its partnership interest, assuming that AB is a general partner, and YZ is a limited partner.
   Required A Required B Compute each partner's initial basis in its partnership interest, assuming that both AB and YZ are general partners. AB's initial basis YZ's initial basis
   

Answer 1

solution- (aj AB and Yare both general partners, :- = $ 641,000 ALS AB's contribued cash = $160,250 / 932 secol ABs share of recourse debt - $ 801,250 AB's initial share in its partnership interest 571,000 = $ land thott contributed YZ's basis in 3 $160,250 of recourse debt Ya's share $731,250 Yz's initial basis in its partnership interest = (6) AB is a general partner and Y2_is a limited pariner: - for Since Y2 is a limited partnere, you y 2 is not responsible paor laev ship recouorse debt. since AB is a general partager AB is responsible for any parineship recourse debt.

ABS AB's contributed cash = Ad's share of recourse debt = $ 641,000 $ 320,500 $961,500 AB's initial basis in its partnership _ interest = ya's Yz's basis in contributed land = $571,000 - 0 42's share of recourse debt Sau ya's mitia basis m its partnership = $574000 interest