Consequences of the transaction-liquidating distribution

Assignment Help Accounting Basics
Reference no: EM13142241

Two years ago, Corporation Z, a 10 percent partner in XYZ Partnership, borrowed $150,000 from the partnership in an arm's length transaction. Corporation Z gave the partnership a properly executed note stipulating that it would repay the loan at the end of three years and that it would pay the partnership 9 percent interest each year on the outstanding principal balance. During the current year, Corporation Z decided to withdraw from the partnership. Both Z and the other partners agreed that the fair market value of Z's capital account was $150,000 and that the partnership would liquidate this interest by distributing Z's own note back to the corporation. On the date of the liquidating distribution, Z's outside basis in its 10% interest in XYZ was $116,000.

Issue: What are the consequences of this transaction to Corporation Z and the XYZ Partnership? What are the Law implications in this analysis? Which conclusions did you arrive at?

Reference no: EM13142241

Questions Cloud

What is intrinsic price per share or worth of one share : the growth rate will be 6% forever. If the dividend per share last year was Rs. 2 and the investors required rate of return is 10% pa, what is intrinsic price per share or the worth of one share.
Explain level of significance is coin based towards heads : A coin was flipped 60 times and came up heads 38 times (a) at the time .10 level of significance is the coin based towards heads? show your decision rule and calculations (b) calculate a p value and interpet.
What pressure will the gas exert : a quanity of gas exerts a pressure of 98.6 kpa at a tempature of 22 degrees celcius. If the volume remains unchanged, what pressure will it exert at -8 degrees celcius
What is total amount leven would pay on the maturity date : May 3, 2010, Leven Corp. negotiated a short- term loan of $ 685,000. The loan is due October 1, 2010, and carries a 6.86% interest rate. Use ordinary interest to calculate the interest. What is total amount Leven would pay on the maturity date?
Consequences of the transaction-liquidating distribution : Issue: What are the consequences of this transaction to Corporation Z and the XYZ Partnership? What are the Law implications in this analysis? Which conclusions did you arrive at?
Argumentative thesis statement : Argumentative thesis statement help? My topic is child labor in India. I need to write a thesis statement. I have this: Child labor in India is a huge problem because of the cycle of poverty it creates, the lack of education children receive because ..
Explain how the cost of the audit is determined : They ask for a full explanation of the service to be provided and to explain how the cost of the audit is determined. Can your help by sending an example of this type of memorandun?
What is the molarity of silver nitrate in the solution : An aqueous solution is 22.0% by mass silver nitrate, AgNO3, and has a density of 1.22 g/mL. What is the molarity of silver nitrate in the solution?
How many units of each product-marshmallow bunnies : Compute the break-even sales (units) for the overall product, E. ? How many units of each product, marshmallow bunnies and jellybeans, would be sold at the break-even point?

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Compute the overhead allocation rate

Allocation and proration of overhead. Tamden, Inc., prints custom marketing materials. The business was started January 1, 2010. The company uses a normal-costing system. It has two direct cost pools, materials and labor and one indirect cost pool..

  Government-wide financial statements

what amount should be recognized as property tax revenues related to the 2007 levy on the government-wide financial statements?

  Are there any associated implications for the profession

Many people believe that an auditor cannot be truly independent when the client pays the audit fees. Can you think of any possible solutions or approaches that might reduce this apparent lack of independence?

  Gross margin as a percent of net revenue

What are some examples of direct and indirect inventoriable costs for Dell? Why has Dell's gross margin (in dollars) steadily increased from 2003 to 2005, yet the gross margin as a percent of net revenue has only increased slightly?

  What is the over or under absorbed overhead

How much overhead is allocated? What is the over/under absorbed overhead?

  What is the maturity risk premium

Assume that real risk-free rate = 3%. Inflation rate is expected to be 8% in year 1, 5% in year 2, and 4% thereafter. Also assume that all T-bonds are highly liquid and free of default risk. If 2-year T-bond yields 13%, what is the maturity risk p..

  Analyse the relative attractions of leasing as a financing

A common question when making a capital budgeting decision is whether to lease or buy an asset. This is akin to the 'make or buy choice' that is often faced by management accountants.

  Problem related to inventory

Jenner Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of 400,000, and sales of 660,000. Jenner's days in inventory is:

  What does it mean to audit around the computer

How might the senior audit manager or partner on a particular engagement determine how much cost is acceptable to incur in order to test a particular area? Can you think of any lower cost alternatives?

  Annual overhead costs problem

If annual overhead costs are expected to be $750,000 and direct labor costs are expected to be $1,000,000, then:

  Integral part of the annual period

Some accountants hold the view that each interim period should stand alone as a basic accounting period, whereas others view each interim period as essentially an integral part of the annual period. Distinguish between these views.

  Compute the largest tax deduction possible

Compute the largest tax deduction possible in 2010 for the equipment (consider the Section 179 election, Bonus Depreciation, and MACRS):

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd