cali lewis dating - Liquidating partnership with capital deficiency

Your basis increases and decreases over the years for required adjustments to arrive at adjusted basis -- the amount you'll use to calculate gain or loss after the liquidation.

liquidating partnership with capital deficiency-23

Liquidating partnership with capital deficiency

Instead, gain or loss is delayed until you sell the property.

Provided the liquidation terminates your entire interest in the partnership, your tax basis in the distributed property is equal to your adjusted basis in the partnership interest minus the cash distributed to you.

Between July 3 and July 29, the noncash assets are sold for $32,500, the partner with the capital deficiency pays his or her deficiency to the partnership, and the liabilities are paid.

After the accounts are closed on February 3, 2016, prior to liquidating the partnership, the capital accounts of William Gerloff, Joshua Chu, and Courtney Jewett are $19,180, $4,020, and $22,140, respectively.

Cash and noncash assets total $5,600 and $54,240, respectively. The partners share income and losses in the ratio of 2:1:1.

Between February 3 and February 28, the noncash assets are sold for ,560, the partner with the capital deficiency pays the deficiency to the partnership, and the liabilities are paid. Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash.Partners, however, can only take a loss on their returns if it's solely the result of a liquidating distribution of cash, outstanding partnership receivables or inventory items.If the partnership distributes property -- anything other than cash and property treated as cash -- during its liquidation, it has no immediate tax effect.Refer to the Chart of Accounts for exact wording of account titles.Chart of Accounts CHART OF ACCOUNTS Gerloff, Chu, and Jewett General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Supplies 118 Office Supplies 119 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Equipment 126 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 Patent LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 William Gerloff, Capital 311 William Gerloff, Drawing 312 Courtney Jewett, Capital 313 Courtney Jewett, Drawing 314 Joshua Chu, Capital 315 Joshua Chu, Drawing 330 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Salary Expense 521 Advertising Expense 522 Depreciation Expense-Building 523 Depreciation Expense-Equipment 526 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Property Tax Expense 539 Miscellaneous Expense 710 Interest Expense Labels and Amount Descriptions Labels For Period February 3-28, 2016 For the Year Ended February 28, 2016 Amount Descriptions Balances after payment of liabilities Balances after realization Balances before realization Capital additions Cash distributed to partners Final balances Less partner withdrawals Net income for the year Payment of liabilities Receipt of deficiency Sale of assets and division of loss Statement of Partnership Liquidation 1.Prepare a statement of partnership liquidation, indicating (a) the sale of assets and division of loss, (b) the payment of liabilities, (c) the receipt of the deficiency (from the appropriate partner), and (d) the distribution of cash.

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