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Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $12,000 of cash and land with a FMV of $57,000. Her basis in the land is $22,000. Andrew contributes equipment with a FMV of $14,000 and a building with a FMV of $35,000. His basis in the equipment is $10,000, and his basis in the building is $22,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew?

Answer :

TomShelby

Answer:

NONE

Explanation:

The gain will be recognize in favor of Sue and Andrew. Not the partnership

Sue will have his capital gain for the land

and Andrew for the equipment and the building.

But the parthnership will only enter the assets it will not earn anything:

cash           12,000

land            57,000

equipment 14,000

building     35,000

       sue capital account           69,000

       andrew capital account     49,000

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