17. Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $29,000 of cash and land with an FMV of $74,000. Her basis in the land is $39,000. Andrew contributes equipment with an FMV of $31,000 and a building with an FMV of $52,000. His basis in the equipment is $27,000, and his basis in the building is $39,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew

SA General Partnership

The amount of gain that SA General Partnership must recognize on the transfer of these assets from Sue and Andrew is:

= $52,000.

Explanation:

a) Data and Calculations:

Contributions by partners

                                  Sue       Andrew       Partner's    Partnership

                                 FMV         FMV             Basis       Gain/(Loss)

Cash                     $29,000                       $29,000

Property:

Land                        74,000                         39,000        $35,000

Equipment                                31,000        27,000            4,000

Building                                   52,000        39,000           13,000

Total property     $74,000    $83,000    $134,000       $52,000

Partner's' basis $103,000    $83,000    $134,000       $52,000