[OnToTheNextOne]

Would someone be able to better explain this problem

Acme and Buck are equal members in Dear, an LLC. Dear has not elected to be taxed as a corporation. Acme contributed $7,000 cash and Buck contributed a machine with an adjusted basis of $5,000 and a fair market value of $10,000, subject to a liability of $3,000. What is Acme’s basis in Dear?

The answer is 8500 , but i have seen questions where liability is assumed in partnerships by the proportion of basis contributed? Am I remembering this wrong? Is that for corporations?

[EuroAddict]

If the problem doesn't say how profits/loss etc are split up, you are to assume it is split amongst partners evenly.

So Acme would get 50% of the 3,000 liability added to their basis.

I don't recall reading anything that said the liabilities are split by proportion donated. Although, they could have said that in a specific problem, but I don't believe it is a general rule.

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[OnToTheNextOne]

Thank you, i was probably remembering incorrectly

[marqzho]

without specifies or without partnership agreement, you are to assume partners split profit and loss evenly 🙂

REG 90
FAR 95
AUD 98
BEC 84

[Skynet]

Never assume partnership's Liabilities especially helping to pay your Girlfriend's or Boyfriend's credit card bills as He/She may have a Serious Spending Problem.

[Author]

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