Hi All, I'm having problems with recognized gain on c corp. The question is a simulation and this is the info they provided: Assuming the following 4 partners have 100% ownership
1) Clay – provided 20,000 boot, property FMV is 60,000 but his cost is 40,000
2) Finch – provided 10,000 booth, property FMV is 50,000 but his cost is 30,000 with 20,000 recourse liability
3) Lark – provided property FMV is 60,000 but his cost is 50,000, he also receive 10,000 boot
4) Token – provided 10,000 cash, property FMV is 40,000 his cost is 5,000 with 20,000 recourse liability
I'm having problem with Finch, Lark, and Token
Finch:
Amount Realized: 50,000
Adj Basis 30,000
Realized Gain 20,000
Recognized Gain ??? (The ans is 0, because the liability was less than the assets basis, but can someone show me where the liability and asset basis? Which asset basis FMV or his cost, and what liability?
Lark:
Amount Realized 60,000
Adj Basis 50,000
Realized G/L 10,000
Recognized Gain 10,000 boot he received , so does that mean if they receive boot is automatically the recognized gain?
Token:
Amount Realized 40,000
Adj Basis 5,000
Realized Gain 35,000
Recognized Gain, why is 5,000?
Thank you all!
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