Partner J and K

[Harvey Lucas]

In 2005, J and K formed a partnership.

J contributed raw land X. His basis was zero, the FMV was 100,000.
K contributed raw land Y. His basis was 100,000, the FMV was 100,000.

There were no other transactions affecting the partnership.

In 2007 the partnership sold raw land X for 150,000.
How much gain is reported on J's K-1 form?
How much gain is reported on K's K-1 form?


In 2008, the partnership sold raw land Y for 160,000.
How much gain is reported on J's K-1 form?
How much gain is reported on K's K-1 form?

Thank You,
Harvey Lucas

[Bees Knees]

You need to read the information in TTB, page SB4-10 in the Small Business edition, or page 20-9 in the Deluxe edition, under the heading “Built-In Gain or Loss.” That information deals with contributing property to a partnership where the FMV and adjusted basis are not the same, and what happens if the partnership later sells the property. It even provides an example for you to follow.