This project covers general partnership basis issues including computation of partners' adjusted basis, determination of current-year tax position, preparation of tax forms, and creation of a memo to the partners with an analysis of their current-year tax issues and changes to basis.
In the current year, Mary, Andrew, and Paul formed Venezia General Partnership. Mary contributed $55,000 cash, Andrew contributed $55,000, and Paul contributed land with a cash basis of $70,000 and a fair market value of $180,000. The partnership assumed a $70,000 mortgage on the land; no partner is personally liable for the mortgage. At the end of the current year, Venezia made a $7,000 payment on the mortgage. Mary, Andrew, and Paul will split all profits and losses equally.
Current-year operations had the following results:
- Sales revenue: $260,000
- Cost of goods sold: $205,000
- Operating expenses: $35,000
- Long-term capital gains: $1,200
- Section 1231 Gains: $450
- Charitable contributions: $350
- Municipal bond interest: $150
- Salary paid as a guaranteed payment to Andrew (not included in expense): $1,500
Part A: Determine Basis
- Using Thomson Reuters, find a court case discussing partners' basis in the partnership interest. Summarize the court case and tax law relating to basis calculations.
- Using the information summarized, determine Mary's, Andrew's, and Paul's initial basis in the partnership interest and the basis for each partner at the end of the current year. These calculations should be 1 page.
Part A Submission Requirements:
- Your summary of the court case, summary of tax law relating to basis calculations, and the specified partners' basis calculations should be 4 pages not including the required cover and reference pages. Note, the basis calculations should not be more than 1 page.
- Support your paper with at least 4 credible, legislative, or court references.
- Format your paper according to APA7 format
- No AI Content!
Part B: Tax Form Preparation
- Prepare Schedule K for the current year from page 4 of Form 1065.
- Prepare Andrew's Schedule K-1.
Part B Submission Requirements:
- The tax forms required for Part B should be submitted as PDF documents.
Part C: Client Letter
Prepare a letter to Andrew summarizing their current year tax issues.
Part C Submission Requirements:
- Your letter should be 3 pages not including the required cover and reference pages as well as introduction and conclusion
- Support your entire paper with at least 4 credible, legislative, or court references The CSU Global Library and Thomson Reuters are good places to find these references.
- Format your entire paper according APA7 format
Your submission should be 8 pages in length and include at least four credible references. Also No AI content!