Calculating Elisha and Ezra's Basis in the Double E Partnership

Introduction

On June 1 of the current tax year, Elisha and Ezra, who are equal partners, decided to form the Double E Partnership. They each made contributions to the partnership, and at the end of the first year, they need to calculate their basis in the partnership interest.

Calculation of Elisha's Basis

Elisha contributed cash of $456,480 to the partnership. In addition, Elisha is responsible for half of the liability associated with the building and land contributed by Ezra, which amounts to $152,160. Elisha is also responsible for half of the construction debt, which is $23,775. Furthermore, Elisha's share of the trade accounts payable is $9,510, and her share of the net income for the year is $35,663.

Therefore, Elisha's basis in the partnership interest on December 31 is calculated as follows:

Elisha's basis: $677,588

Calculation of Ezra's Basis

Ezra contributed a building and land with an adjusted basis and fair market value of $760,800 but subject to a liability of $304,320. Ezra's share of the liability is $152,160. Additionally, Ezra is responsible for half of the construction debt, which is $23,775. His share of the trade accounts payable is $9,510, and his share of the net income for the year is $35,663.

Therefore, Ezra's basis in the partnership interest on December 31 is calculated as follows:

Ezra's basis: $677,588

How much is Elisha's basis in the partnership interest on December 31? Ezra's?

Elisha's basis in the partnership interest on December 31 is $677,588. Ezra's basis in the partnership interest on December 31 is also $677,588.