KCAC Actions Required

KCAC Actions Required a) File 2012 KCAC Partnership Return (form 1065) reflecting S405k capital contribution to Michelle Saipher capital account (cumulative) which mathematically would change % ownership to 52.7% Michelle and 47.3% JE b) In 2013, JE gifts 51,823k to Darren by wire or check c) In 2013, Darren gifts to Michelle 51,223k d) An agreement is drafted by which Michelle buys out JE's interest for 50% of capital account (capital account and FMV being similar), or S525k e) Michelle repays S698k borrowed to originally fund KCAC purchase Explanation a) records $405k of capital improvements made by DKI in the property b) provides DKI with funds to repay JE for the, $698k borrowed by Michelle for the property down payment, $525k for Michelle to buy out JE's 47.3% interest in KCAC, and $600k for DKI to repay his loan to NYSG c) to provide Michelle with funds to repay the $698k & $525K per b) above d) enables Michelle & DKI to get full ownership of the property. Due to JE wanting with withdraw but owning only a non-control minority interest in an illiquid investment with an indefinite life, Michelle buys out JE's interest for 50% of capital account (capital account and FMV being similar), or $525k. JE sustains a $525k capital loss on the sale e) loan to JE fully repaid EFTA01108509