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QUESTION
Darrel, Sissy, and Carol form a partnership. Darrel and Sissy give equipment and a building, respectively. Carol agrees to perform all of the...
Darrel, Sissy, and Carol form a partnership. Darrel and Sissy give equipment and a building, respectively. Carol agrees to perform all of the accounting and office work in exchange for a 10% interest.
Darrel's equipment:
FMV: $20,000
Basis: $100,000
Partnership: 60%
Sissy's building:
FMV: $100,000
Basis: $50,000
Partnership: 30%
Carol's services
FMV: $ 0
Basis: $ 0
Partnership: 10%
- Which partners recognize any gain? If so, how much? Explain.
- What is the basis for each partner in his or her partnership interest?
