John and Matt are auto Mechanics. They decide to work together under the name Bedford...
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Accounting
John and Matt are auto Mechanics. They decide to work together under the name Bedford fall auto Repairs, sharing profits and losses equally. Each contributes the following assets and liabilities to the business:
Adjusted basis Fair Market Value Mortgage
John: Cash $33,000 $33,000 $0
Matt: Equipment 2,000 5,000 2,000
Building 20,000 40,000 10,000
A. What is the form of the business for tax purposes? Does the form of the business have an effect on John and Matt's tax liability?
B. Assuming that Bedford Falls is a partnership, do John and Matt recognize any gain on their transfer of assets to the partnership?
C. What is John's basis in his partnership interest? What is Matt's basis? Show Calculations
d. What are the aggregate and entity theories of partnership[ law and taxation?
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