Formation of the p ship

Question 1

What is the rule for asset character under 702(b)?

Answer 1

At an initial level, the pship determines character at the entity level without affording consideration to the character of the asset in the partners’ hands (determined w/ respect to the entity itself)

Question 2

What is 724 about?

Answer 2

724 prevents parties from achieving a character advantage through the use of the pship form

Question 3

Unrealized receivables have what kind of character?

Answer 3

Unrealized receivables will always give rise to ordinary income to the pship - 724(a)

Question 4

Capital loss property in the hands of the contributing partner will give rise to what kind of character if what rule is followed?

Answer 4

It will give rise to capital loss if disposed of by the pship within 5 years of contribution - 724(c)

Question 5

Inventory items (like land when the contributing partner is a dealer of land) in the hands of the contributing partner will rise to what kind of ordinary income if what rule is followed?

Answer 5

Inventory items (like land when the contributing partner is a dealer of land) in the hands of the contributing partner will give rise to ordinary income if disposed of by the pship within 5 years of contribution - 724(b)

Question 6

What is the adjusted basis and fmv for accounts receivables when it’s first recorded int he balance sheet?

Answer 6

Accounts receivable has 0 basis and fmv equal to amount of accounts receivable per facts given