Hello, in this lecture, we're going to work on a problem related to a partnership. We're going to discuss the creation of the partnership and allocation of income, focusing on the book financial statements and making adjustments for the tax financial statements, specifically in terms of the capital accounts. We need to keep track of the difference between the book basis capital accounts and the tax basis capital accounts, so we'll maintain two sets of books - one for the book basis and one for the tax basis. This way, we can analyze it through journal entries and balance them accordingly, which is the approach I'm more familiar with, given my background in the accounting profession. Additionally, we'll examine it through a table, which is commonly used for basis calculations, and it's helpful to connect it with a trial balance to ensure balance. After studying this, we'll also demonstrate how the information would be presented in a tax return to provide a simple overview. Remember that a partnership is a flow-through entity, meaning that they need to file a partnership tax return, and then distribute a Schedule K-1 to the individual partners to report their share of income. We'll explore the different types of income and how it flows from the partnership return to the K-1 and then to the individual return. We'll also review the actual documents, such as the partnership tax return and the K-1. Now, let's begin the problem. The partnership consists of three partners - A, B, and C. A and B contribute cash totaling $100,000, while C contributes land. The land has a fair market value of $180,000, but a cost basis of $70,000. This creates the first complication in our entry. We'll record all three partners' contributions in a single journal entry. First, let's...
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Video instructions and help with filling out and completing Are Form 1120 Schedule M 3 Publicly
