Bryan, Shahin, and Michele form a partnership. Bryan and Shahin contribute inventory and a building, respectively. Michele agrees to perform all of the accounting and office work in exchange for a 10% interest. a. Do any of the partners recognize any gain? If so, how much and why?
b. What is each partner's basis in his or her partnership interest?
c. What is the basis to the partnership of each asset?

Question

Bryan, Shahin, and Michele form a partnership. Bryan and Shahin contribute inventory and a building, respectively. Michele agrees to perform all of the accounting and office work in exchange for a 10% interest.  a. Do any of the partners recognize any gain? If so, how much and why?
b. What is each partner's basis in his or her partnership interest?
c. What is the basis to the partnership of each asset?

Quizplus · Accepted Answer

The Answer of Bryan, Shahin, and Michele form a partnership. Bryan and Shahin contribute inventory and a building, respectively. Michele agrees to perform all of the accounting and office work in exchange for a 10% interest.  a. Do any of the partners recognize any gain? If so, how much and why?
b. What is each partner's basis in his or her partnership interest?
c. What is the basis to the partnership of each asset?

Bryan, Shahin, and Michele Form a Partnership