(Answered) Assets all real estate1000000liabilities

Accounting

Assets (all real estate)	$1,000,000
Liabilities (non-recourse)	$1,300,000
A capital (40% P&L))	$100,000
B Capital (30% P&L)	$(100,000)
C Capital (30% P&L)	$(300,000)

C had deducted substantial losses from his investment in ABC LLC, reducing income from his other real estate investments. C decided that the partnership was a poor investment - it never made any money and never will. Therefore, he abandoned his interests in the LLC.

a. What are the tax consequences to C from abandoning his partnership interest?

b. C did not abandon his interest, but D made a $50,000 capital contribution and is to receive 40% of profits and losses, reducing C's interest to 18%. What are the tax consequences to C of D becoming a partner?

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