[Tux]

A SIM in the Becker practice exam # 2 confused me – Please help~!

It’s about the formation of a partnership, and is asking that we compute the beginning basis of each partner.

This is the confusing part…..

Fred contributed inventory

Herman contributed land

“The land was a capital asset to Fred.”

Huh ?!?!

If Fred contributed inventory, how/why is the land a capital asset to Fred?

It’s important because the land was contributed with a mortgage that was assumed by the partnership.

The solution subtracts the mortgage amount from FRED’s basis (even though he contributed inventory), then adds back his prorated portion of the liability to his basis.

But, if HERMAN contributed the land, the mortgage should be subtracted from HERMAN”S basis, then his prorated portion of the liability should be added back.

Do you see my confusion ????

Is this a mistake in the problem, or do I not understand something?

FAR - 86 - 2/27/14
AUD - 75 - 5/29/14
BEC - 80 - 8/31/14
REG - 89 - 2/27/15
Praise Jesus! I'm done!!

Study resources:
Becker
Wiley test bank

[Tux]

bump…..

FAR - 86 - 2/27/14
AUD - 75 - 5/29/14
BEC - 80 - 8/31/14
REG - 89 - 2/27/15
Praise Jesus! I'm done!!

Study resources:
Becker
Wiley test bank

[lauren725]

I am reviewing this and mine shows that Fred contributed land, and Herman contributed inventory?? Does yours show something different?

AUD - 73,91
FAR - 79 - Thank you God!
BEC - 73,79!!!!
REG - 92 whatttt??!

I used Becker review + flashcards, Ninja Audio, Ninja MCQ supplement on BEC and REG.

Done! Praise God!

[Tux]

Thanks, Lauren –

Yes, isn't that weird?

Mine says Fred gave inventory, Herman gave land, then “Land was a capital asset to Fred”

I'm using the downloaded version which is on my computer, so maybe it was a mistake and they changed it.

Are you going online to the Becker website to see this, or is it downloaded on your computer?

FAR - 86 - 2/27/14
AUD - 75 - 5/29/14
BEC - 80 - 8/31/14
REG - 89 - 2/27/15
Praise Jesus! I'm done!!

Study resources:
Becker
Wiley test bank

[lauren725]

I am looking off of the program downloaded to my computer. That is strange!

AUD - 73,91
FAR - 79 - Thank you God!
BEC - 73,79!!!!
REG - 92 whatttt??!

I used Becker review + flashcards, Ninja Audio, Ninja MCQ supplement on BEC and REG.

Done! Praise God!

[Tux]

Thanks for your response.

I'll just consider it a mistake in the wording. That makes me feel better cuz the scenario made no sense.

One less thing to worry about.

FAR - 86 - 2/27/14
AUD - 75 - 5/29/14
BEC - 80 - 8/31/14
REG - 89 - 2/27/15
Praise Jesus! I'm done!!

Study resources:
Becker
Wiley test bank

[Author]

Replies