Expert Answer:Ch.10 Blue Bells’ Partnership Tax Return Accountin

  

Solved by verified expert:Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $110,000 and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $70,000 and was appraised at $180,000. The land was also encumbered with a $70,000 non-recourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year Blue Bell made a $7,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue $470,000 Cost of goods sold $410,000 Operating expenses ,000 Long-term capital gains ,400 1231 gains $900 Charitable contributions $300 Municipal bond interest $300 Salary paid as a guaranteed payment to Deanne (not included in expenses) $3,000 Complete the following below: Compute the adjusted basis of each partner’s interest in the partnership immediately after the formation of the partnership in an excel spreadsheet.Prepare Blue Bells’ Partnership tax return page 1 and Schedule K for its first year of operations along with Schedule K-1 for Deanne.
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Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current
year. Aaron and Deanne each contributed $110,000 and Keon transferred an acre of undeveloped
land to the partnership. The land had a tax basis of $70,000 and was appraised at $180,000. The
land was also encumbered with a $70,000 non-recourse mortgage for which no one was personally
liable. All three partners agreed to split profits and losses equally. At the end of the first year Blue Bell
made a $7,000 principal payment on the mortgage. For the first year of operations, the partnership
records disclosed the following information:
Sales revenue
$470,000
Cost of goods sold
$410,000
Operating expenses
Long-term capital gains

1231 gains
$70,000
$2,400
$900
Charitable contributions
$300
Municipal bond interest
$300
Salary paid as a guaranteed payment to Deanne (not included in expenses)
$3,000
Complete the following below:
1. Compute the adjusted basis of each partner’s interest in the partnership immediately after the
formation of the partnership in an excel spreadsheet.
2. Prepare Blue Bells’ Partnership tax return page 1 and Schedule K for its first year of operations
along with Schedule K-1 for Deanne.

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