Calculate the initial basis in their partnership interest

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Reference no: EM132217869

Question - Streetcar General Partnership was created in the current year with the following partner contributions: Mike contributed $110,000 cash, Alex contributed $110,000 cash, and Pat contributed land with a tax basis of $140,000 and a fair market value of $360,000. The partnership assumed a $140,000 mortgage on the land; no partner is personally liable for the mortgage (nonrecourse liability). At the end of the current year Streetcar made a $14,000 payment on the mortgage. Mike, Alex, and Pat will split all profits and losses equally.

Sales revenue	$520,000
Cost of goods sold	410,000
Operating expenses	70,000
Long-term capital gains	2,400
Section 1231 Gains	900
Charitable contributions	700
Municipal bond interest	300
Salary paid as a guaranteed payment to Alex (not included in expense)	3,000

Using the information summarized, calculate Mike's, Alex's, and Pat's initial basis in their partnership interest and the basis for each partner at the end of the current year.

Reference no: EM132217869

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