Owen owns 60 percent of the Big Time partnership.He sells to the partnership a machine for $70,000 that has a $45,000 basis.What would the taxable income be for Owen and what is the partnership's basis in the machine?

Question

Quizplus · Accepted Answer

Since Owen owns 60 percent of the partnership, his share of the gain on the sale of the machine is calculated as follows:
Total gain = Sale price - Basis
Total gain = $70,000 - $45,000 = $25,000
Owen's share of the gain = 60% x $25,000 = $15,000
Therefore, Owen's taxable income would be $15,000.
The partnership's basis in the machine would be the purchase price of $70,000.

Owen Owns 60 Percent of the Big Time Partnership