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What is michelle basis in her partnership interest

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Question - Michelle pays $120,000 cash for Brittany's one-third interest in the Westlake Partnership. Just prior to the sale, Brittany's basis in Westlake is $96,000. Westlake reports the following balance sheet:

Tax Basis FMV Assets:

Cash $ 96,000 $ 96,000

Land 192,000 264,000

Totals $ 288,000 $ 360,000

Liabilities and capital:

Capital Amy 96,000

Brittany 96,000

Ben 96,000

Totals $ 288,000

a. What is Michelle's basis in her partnership interest?

b. What is Michelle's inside basis?

c. If Westlake were to sell the land for $264,000 shortly after the sale of Brittany's partnership interest, how much gain or loss would the partnership recognize?

d. How much gain or loss would Michelle recognize?

e-1. Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment?

e-2. Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation?

Reference no: EM132202930

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