Business, 14.10.2020 01:01 IntellTanito

A and B contribute $100,000 upon formation of a limited partnership. A is a general partner and B is a limited partner. The partnership purchases an office building on leased land for $200,000 and elects straight-line cost recovery. Assume (for simplicity) that the property has a 10-year recovery period. The partnership agreement allocates all items of income and loss equally with the exception of the cost recovery deductions, which are allocated entirely to B. Assume (perhaps unrealistically) that both partners are unconditionally obligated to restore a deficit to their capital accounts upon a liquidation of the partnership. A) Assume that B is not required to restore a deficit in her capital account, but the partnership agreement includes a "qualified in come offset." If the partnership continues to operate the building, what is the result to A and B in year one, in year six? B) What results in both years under the facts of (d), above, if in addition B has contributed her promissory note for $100,000 to the partnership?C) What results under the facts in (e), above, if in year six the building has a $400,000 fair market value, and A and B, acting as partners, agree that they will borrow $200,000 on a recourse basis, using the building as security, and distribute the proceeds equally to them selves early in year seven? D) What result under the facts in (e), above, if in year six the value of the building is $300,000, and A and B, acting as partners, agree that when its value reaches $400,000 they will take out a $200,000 2 recourse mortgage and distribute the proceeds equally? E) Assume that B is not required to restore a deficit in her capital account and that the partnership agreement does not contain a qualified income offset." If the partnership continues to operate the building, what is the result to A and B in year one? In year six? F) What results in both years under the facts of (h), above, if in addition B has contributed her promissory note for $100,000 to the 8 partnership?

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A and B contribute $100,000 upon formation of a limited partnership. A is a general partner and B is...

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