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Discuss what are the tax consequences to c from abandoning

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Reference no: EM131797854

Assets (all real estate)

$1,000,000

Liabilities (non-recourse)

$1,300,000

A capital (40% P&L))

$100,000

B Capital  (30% P&L)

$(100,000)

C Capital (30% P&L)

$(300,000)

C had deducted substantial losses from his investment in ABC LLC, reducing income from his other real estate investments.  C decided that the partnership was a poor investment - it never made any money and never will.  Therefore, he abandoned his interests in the LLC. 

a. What are the tax consequences to C from abandoning his partnership interest?

b. C did not abandon his interest, but D made a $50,000 capital contribution and is to receive 40% of profits and losses, reducing C's interest to 18%.  What are the tax consequences to C of D becoming a partner?

Reference no: EM131797854

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