Daisy Tree Partnership owns and operates two apartment complexes in the metropolitan area. The first complex...

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Accounting

Daisy Tree Partnership owns and operates two apartment complexesin the metropolitan area. The first complex was contributed to thepartnership by partner L. The other two partners (M and N)contributed cash which, together with borrowed funds, was used topurchase the second complex. The three partners share partnershipincome, loss, gain and deduction equally. The tax basis and bookvalue of the partnership’s assets at the end of the current yearare as follows: Tax Book Cash and equivalents Tax $60,000.00 Book$60,000.00 Receivables Tax $- Book $45,000.00 Apartment Complex 1Tax $600,000.00 Book $1,500,000.00 Accumulated depreciation,complex 1 Tax $(120,000.00) Book $(300,000.00) Apartment Complex 2Tax $2,475,000.00 Book $2,475,000.00 Accumulated depreciation,complex 2 Tax $(180,000.00) Book $(180,000.00) Land and otherassets Tax $200,000.00 Book $200,000.00 Total assets Tax $2,035,000.00 Book $4,070,000.00 B. Doesthe curative allocation of depreciation on complex 2 from L to Mand N completely “cure” the discrepancy caused by the ceiling rulewith respect to the allocation of depreciation on complex 1? C. Howcan the partnership eliminate the remainingdiscrepancy?

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4.1 Ratings (647 Votes)

Value in dollar Particulars Tax Value Book Value Difference Cash Equivalent 60000 60000 Reivable 45000 45000 Complex 1 600000 1500000 900000 A Dep See Answer

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