William Henry has a 50% interest in Harrison Partnership. The basis for his partnership interest is $50,000. The partners share the economic risk of loss from liabilities in the same way they share partnership income and losses. William Henry receives a distribution of land that has an FMV of $40,000 and an adjusted basis of $30,000. The land is subject to a $25,000 liability, which William Henry assumes. His basis in the partnership interest following the land distribution is
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Fillmore Corporation, a calendar-year S corporation, has bee…
Fillmore Corporation, a calendar-year S corporation, has been an S corporation since its inception. In 2025 Fillmore recorded the following: Gross receipts – $60,000; Dividend income – $18,000; Supplies expense – $2,000; Utilities expense – $1,500. What amount of income should be separately stated on Fillmore’s 2025 S corporation Schedule K?
Thomas owns a 35% interest in Jefferson Partnership. On Janu…
Thomas owns a 35% interest in Jefferson Partnership. On January 1, 2025 Thomas had a basis in his partnership interest of $5,000. For 2025 Jefferson Partnership reported the following items. What is Thomas’s outside basis after adjustment for his share of these items? Ordinary business income $ 100,000 §1231 gain 15,000 Charitable contributions 25,000 Tax-exempt income 3,000 Additional Jefferson Partnership bank loan 12,000
The Polk Partnership balance sheet (cash method) includes th…
The Polk Partnership balance sheet (cash method) includes the following assets on December 31, 2025. James, a 1/3 partner, has an adjusted basis of $90,000 for his partnership interest. If James sells his entire partnership interest to Sarah for $100,000 cash, what is the amount and character of James’s gain or loss from the sale? Basis FMV Cash $ 180,000 $ 180,000 Accounts receivable -0- 60,000 Land 90,000 120,000 Total $ 270,000 $ 360,000
Abraham has a basis in his Lincoln Partnership interest of $…
Abraham has a basis in his Lincoln Partnership interest of $30,000. He receives a current distribution of $20,000 cash and investment land (FMV $7,000, basis $6,000). His basis in the land is
Martin has a 30% interest in the Van Buren Partnership and r…
Martin has a 30% interest in the Van Buren Partnership and receives a guaranteed payment of $30,000. In 2025, Van Buren reports ordinary income of $25,000 and capital gains of $60,000 before taking into account Martin’s guaranteed payment. What is the amount and character of all income or loss that Martin must report as a result of partnership activities?
Martin transfers an asset ($200,000 FMV; $140,000 A/B) to Va…
Martin transfers an asset ($200,000 FMV; $140,000 A/B) to Van Buren Corporation in a transaction that qualifies under §351. Martin receives Van Buren stock (FMV of $180,000) and Johnson Inc. stock ($20,000 FMV; $10,000 A/B). Van Buren Corporation must recognize
McKinley Incorporated reported a net capital loss of $13,000…
McKinley Incorporated reported a net capital loss of $13,000 in 2025. McKinley had a net capital gain of $4,300 in 2022and $3,000 in 2021. In 2024, although the company suffered a net operating loss, it had net capital gains of $1,000. What is the amount of McKinley Incorporated’s capital loss carryover to 2026 after it applies the carryback?
Lincoln Corporation had operating income of $395,000, operat…
Lincoln Corporation had operating income of $395,000, operating expenses of $280,000, a dividend received of $60,000, a capital loss of $10,000, a capital gain of $25,000 and a dividend received deduction of $30,000. What is Lincoln Corporation’s income tax liability for the year?
John Quincy transfers property ($200,000 FMV; $190,000 A/B)…
John Quincy transfers property ($200,000 FMV; $190,000 A/B) to a newly formed corporation in a transaction that qualifies under §351. John Quincy receives stock with a FMV of $180,000 and $20,000 cash. John Quincy’s basis in the stock is