swaitsandClaude Opus 5.5
ea14dfc986
Book value is cost less what the books posted; the schedule's figure is apart. An asset's acquired date comes from its entry. Contributed property keeps its section 723 carryover basis apart from its depreciable basis (the lower of value and adjusted basis), with its 704(c) built-in gain and method. The K-1 worksheet reports tax-basis capital (Form 1065 Item L) beside the book figures, leaving open what only the CPA knows. Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com> Claude-Session: https://claude.ai/code/session_01T3gXMVt7XJPi6ens1or9Dj
79 lines
2.3 KiB
TOML
79 lines
2.3 KiB
TOML
# P3 defect 13, named regression 5 (built_in_gain_is_fixed_at_contribution_not_book_cost).
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id = "assets-built-in-gain-fixed-at-contribution"
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title = "The §704(c) built-in gain is fixed at contribution, whatever the book cost becomes"
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rule = "The built-in gain on contributed property is the excess of its book value (its fair market value) over the contributing partner's adjusted tax basis upon contribution; correcting the book cost later never changes the figure at contribution."
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status = "AUTHORITY"
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sources = [
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"Treas. Reg. §1.704-3(a)(3)(i)-(ii)",
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]
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tags = ["fixed-assets", "tax-basis", "704c"]
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[setup]
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currency = "USD"
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fiscal_year_start = "01-01"
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basis = "accrual"
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rounding = "half-away-from-zero"
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[[setup.accounts]]
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code = "1500"
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name = "Equipment"
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type = "asset"
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[[setup.accounts]]
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code = "1510"
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name = "Accumulated Depreciation"
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type = "asset"
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[[setup.accounts]]
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code = "3000"
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name = "Capital"
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type = "equity"
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[[setup.accounts]]
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code = "6200"
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name = "Depreciation Expense"
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type = "expense"
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# A press contributed from business use: worth 1,000.00, held by the member
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# at an adjusted basis of 400.00. (Nothing rounds here.)
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[[setup.assets]]
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id = "press"
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description = "Press"
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cost = "1000.00"
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salvage = "0.00"
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life_months = 36
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in_service = "2026-01-01"
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method = "straight_line"
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cost_account = "1500"
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accumulated_account = "1510"
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expense_account = "6200"
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acquired_by = 1
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basis = { rule = "carryover_723", contributor_adjusted_basis = "400.00", fmv_at_contribution = "1000.00" }
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[[events]]
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date = "2026-01-01"
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description = "Press contributed at its value"
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lines = [
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{ account = "1500", side = "debit", amount = "1000.00" },
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{ account = "3000", side = "credit", amount = "1000.00" },
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]
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# Hand check: §723 basis 400.00, depreciated from (carryover); built-in
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# gain 1,000.00 - 400.00 = 600.00.
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[[expect]]
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query = "asset_basis"
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asset = "press"
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after = 1
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values = { tax_basis_723 = "400.00", depreciable_basis = "400.00", built_in_gain_704c = "600.00" }
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# The book cost corrected to 1,100.00 (costs to bring it to use): the gain
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# at contribution stays 1,000.00 - 400.00 = 600.00, not 700.00.
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[[changes]]
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after = 1
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correct_asset = { asset = "press", cost = "1100.00", reason = "costs to bring it to use" }
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[[expect]]
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query = "asset_basis"
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asset = "press"
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values = { tax_basis_723 = "400.00", fmv_at_contribution = "1000.00", built_in_gain_704c = "600.00" }
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