Proposal for Wind Farm Using Windpro Software

Proposal for Wind Farm Using Windpro Software INTRODUCTION: The world is experiencing an extraordinary boom of renewable energy as never before in the history. The main reason for this is mainly global warming, which is reflected by the greenhouse effect, resulting in a large part in rising temperatures. Two figures to visualize this boom; According to IEA (International Energy Agency) two wind turbines are installed every hour in China and every day and according to the same source 500,000 photovoltaic panels are installed throughout the world. So, what makes renewable energies optimistic? The answer is that there are two very powerful motor behind that: The first is the human genius thanks to which we have made giant steps in the renewable energy to the point that they become almost as profitable as the sources of classic energy. For example, according to IRENA (International Renewable Energy Agency) the cost of photovoltaics decreases by 70% between 2010 and 2015 same thing with regard to wind energy with a decrease of 40% When the second engine is the political will with mainly the signing of the decree like the COP, the public subsidy, the different facilities offered, etc. PURPOSE: The main purpose of this report this to make a technical-economic design of a wind farm in a choosing place using wind pro software to attract potential investors. PROBLEM: The criteria for choosing a wind power plant depend on the size, power and number of units. The efficiency of a wind turbine depends on the regularity and the power of the wind. The most interesting sites are generally located by the sea or to the tops of hills and clear mountains. It can also be a solution in countries where the interconnection lines will not succeed because of the low population density even if the winds are not optimum. Having the freedom to choose a site, and coming from Algeria my assessment will be focused in one of the most favourable area to install a wind farm this country, the choice of the size and the number of the turbines will be according to the meteorological and natural conditions of the region and they will be discussed later on. SCOPE : Mainly focused towards fossil fuel energy, the renewable energy sector still poorly exploited in Algeria or at least not at all, the assessments of wind and solar sources are not deeply studied, for the moment the installations available are mostly orientated on experimental basis, few amount for investment and means of research are the principal reason for that despite of the big potential available, specially on solar power where 84% of the country is covert by the Sahara. Until nowadays 98% of the electrical production in Algeria come from gas, the lasts years increase evolutions in power demand, followed by the falling oil prices have caused a significant budget deficit since the state subsidizes in full the gas destined for the production of electricity, up to 5.5 billion $ in 2014 according to Sonatrach (the Algerian energy company) with an increase of 10% of the energy consumption each year. Following that and in view of the circumstances in 2015 the Algerian state has declared a national development program for renewable energy with the target to create 22000 MW of power by 2030, 4500 MW will be realized from here to 2020 according to the CREG (commission for the regulation of electricity and gas). The renewable energy development programme in MW (source www.creg.gov.dz) I. Wind assessment: 1.literature assessment: Several studies about the wind resources in Algeria has been done, and a general wind map was so created with a data measured from a distance of 10m above the ground level, the main methods used were mainly numerical simulations, and extrapolations with the help of meteorological data and several measuring points; In 2000 a study from Dr N. Kasbadji Merzouk aiming to the creation of a wind chart in Algeria has been published and the results of the annual mean wind speed was illustrated in a map: In this case of study, 10 years wind speed data from 26 stations has been used, and additional data from The National Office of Meteorology in Algeria has been included in order to refine the extrapolation results, Further calculation that take the 10 m above the ground results to 25m by interpolation had shown the map below : Lasts research in 2013 that took new meteorological data and much more measurement points compared by the one above has been done by Dr. Sidi Mohammed Boudia show results as follows: Thru those studies we can tell clearly that the main wind speed is concentrated in the south west of the country and specially in the region of Adrar (about 1500km south west of the capital Algiers) where we can see a mean speed of up to 6.5 m/s at 10 m above the ground and up to 7m/s at 25m height, those results are still acceptable for a large onshore project in the way where they push us to know what about the wind speed in up to 100m. In 2013, an open access data platform has been launched by the international renewable energy agency (IRENA) called the global atlas for Renewable energy, this project is the result of international collaboration from several research institutes like DTU wind energy, private companies and governments, the aim was to bring an easy and a simple way for accessing data and analysis for renewable energy assessment. Using this platform, we can find some data that goes up to 200m, we can see the results as below: (a) These maps show successively the wind speed in the country at 50m, 100m, 200m. from here and even if the results are not the most accurate, we can see that the real potential of the wind energy in Algeria is becoming more interesting. 2. WindPro assessment : Having a preliminary knowledge about the wind speed in the country and using the results found on the different research and studies, our assessment using windpro will be focused in the windiest area, namely the Area of Adrar. The characteristics of the terrain strongly influence the wind flow and thus play an important role in the geographical extrapolation of the wind regime. The WindPRO software and the WAsP flow model are used for this study. WAsP requires a terrain definition through the following input data: elevation, roughness and other obstacles to wind flow Site description: Fatiha Ben Miloud and AL, who have moved to the region to identify some sites in which the wind farm can be installed, claimed that a site has been particularly predominant for its proximity to the electrical substations of Sonelgaz (national society of electricity and gas) This site is located about 73 km north of the town of Adrar. with an altitude of about 260 m. The available area is large,the topography is flat and the roughness of the ground is weak. Apart from the substation and the electric poles, there are no obstacles in the vicinity of this site. The pictures taken by Fatiha Ben Miloud below show the morphology of the terrain near the Sonelgaz substation. North side West side East side South side Additionally the site is ideal for transport where it is near the road axis Adrar Timimoun , but the most advantageous is that this site is located close to a HVV substation which reduces construction costs. From here we can choose the right location using windpro, which requires an exact spot in the beginning to do further simulation. the images above shows the site of the wind farm using Windpro and the Openstreetmap data , we can confirm the research done by Fatiha Ben Miloud about the potential of this area ; the availability of the space is huge , the link to the site is easy ,and there is no perturbation with the surrounding. BLABLABLABLABLABL Wind regime on site: defining the wind regime on a chosen site are usually done using meteorological measure instruments called anemometers, those devices are specially used to do wind assessments like speed and direction. It is highly recommended to make up to 2 years of measurements on the site in the beginning of a project, and the more traditional methods of that is to stand a mast. Being the most economical solution compares to Sodar and Lidar which can be very expensive despite de accuracy, the mast can be set up to the desired height of measurement and can carries several instruments for temperature measurement and mainly anemometers. Cups anemometers the most commonly used, figures below can show some designs of those devices, the operating principle is simple; the torque generating from the turning cups under the effect of win, will be transformed in to electrical signal, this last will be calibrated and transformed in to wind speed output. In this case of study. Meteorological data on windpro were given from METAR (METeorological Aerodrome Report) in the closest local aerodrome of Adrar and being designed for only national flight this aerodrome is small and not a very active one, the measurements are taken every 180 minutes from a height of 10m, the table below summaries the monitoring of the wind in the area : Meteo data Adrar_TOUAT_SYNOP_60-620_N27.880_W00.280 Type de station METAR/SYNOP System Cup anemometer Places of observation Control TOWER ( TWR) height 10m Observation Every 180 minuts Intervalle used 01/01/2007 to 13/04/2016 Even if the specification model of the anemometer was not found in the different documentations, the picture below shows clearly the usage of a cup anemometer in the control tower of the  aerodrome. We can also notice and for a software reason that the interval of the measurement stops at 13/04/2016 even if the interval wanted was for 10 years. The data results from the Metar station are listed in the table below: Height M 10 Weibull mean speed m/s 5.9 Weibull A m/S 6.7 Weibull K 2.01 Main wind direction NNE, ENE We normally describe the wind variations at a given site using a Weibull distribution like the one The shape of the curve is determined by a so-called shape parameter equal to 1.750. This graph is a probability distribution (frequency distribution). The probability that the wind blows at any speed (including zero) is necessarily equal to 100%, the area below the curve will always be exactly 1. The statistical distribution of wind speeds varies from place to place as it depends on the local climatic conditions, the landscape and its surface. The Weibull distribution therefore tends to vary, both in form and in average value. These results show the concordance between the research carried out in the literature assessment done in the first part and the data analysis from windpro , where we can see clearly that the dominant wind direction is NNE and ENE , with a mean speed of 5.9m/s Additionally, to this, the WAsP methodology is used to extrapolate selected wind statistics up to 50 m and later on up to the hub height and up to the location of each wind turbine. The purpose of that is to see the real potential of the wind at a more height altitudes. Roughness and elevation are the two crucial factors to do wind measurement, this step is crucial when using windpro and more precisely for WAsP. Elevation: The wind regime can be strongly influenced by elevation differences. The terrain elevation is modeled within a radius of 5 km and is based on the NASAs Radar Topography Mission SRTM data. The contours are then generated with an altitude difference of 10 m between two successive curves. Roughness: The roughness is a key parameter of the equation that models the vertical wind profile Any change in roughness causes a change in the vertical wind profile. The impact at the measuring or hub height can vary greatly as a function of the distance from the change in roughness and atmospheric conditions. Mettre 50 METRE II.WIND FARM : Wind turbines: Whatever in size, power or efficiency, the choice of the wind turbine depends on several parameters; The nature of the terrain where it will be sitting, the wind resources in the area and the noise level are some of the main criteria and specially for a wind farm development. but further that, the availability and reliability of the models needed in addition of the spare parts are very important factor that decide if yes or not the turbine is taken into consideration. And finally, the availability of warranty, and proximity of operation and maintenance teams is also more than desirable. Being heavily integrated in Algeria and specially in the energy field, the choice of the US manufacturer GE (General Electric) was made in a strategic point of view in the way where possessing a very large infrastructure, plus an infallible experience in the country, GE can without a big difficulty manufactured the wind turbines in Algeria, which can minimize the costs and facilitate the transport as well as the installation On this case of study, two different type wind turbines and 16 in total had been choosen: Model N °1: Model reference: GE WIND GE 2.5-120-2,500 number 8 Hub heights: 98.3 m Rotor diameter: 120 m Power rated: 2500 KW Frequency: 50 Hz Noise: 106 dBA Class : IEC IIIs Commissioning : 2014 Technology: Model based controls Cold weather extreme *GE claimed that this model has the worlds most efficient high output wind turbine and has a competitive power value at low wind speed with 98% of reliability from its global fleet. Model N °2: Model reference: GE WIND GE 1.7-100-1,700 Number 8 Hub heights: 96m Rotor diameter: 100 m Power rated: 1700 KW Frequency: 50 Hz Noise: 107 to 105 dBA with low noise trailing edge technology Class : IEC IIIs Commissioning : 2013 Technology: Model based controls, low noise trailing edge, vortex generators, weak grid support *GE claimed that this model has the best in class capacity factor with high energy capture in low wind speed environments. The specific choice of those two model was mainly done because of their high efficiency in low wind speed specially when our farm site has a wind speed lower than 10m/s. Sitting: the choice of the sitting of the wind turbine depend mainly in the available area in the site, the nature of the terrain, and the wind direction, those characteristics define the number of the turbine as well as the way of the sitting. In our case, even with the availability of a big, flat and empty area, the sitting of the wind turbines will be in two straight rows with 8 x GE 2.5-120-2,500 in the front and 8 x GE 1.7-100-1,700, The two rows are facing the wind flow an angle of 127 °. the main reason for this configuration is gain the maximum of power with a smaller area of usage in the way where the more powerful turbines are sitting in front of the less powerful ones, but with a particularity where even if the front turbines will absorb the energy SEE GUIDENCE SITTING PDF TO CONTINUE MICROSITTING figure : // The long-term wind regime expected at the representative height at the location of the wind turbines is shown in Table and Figure The mean wind speed at hub height at the location of each Wind turbine is included in Annex E. Location E 1,377,483 N 3,181,536 WT model GE 2.5-120-2,500 GE 1.7-100-1,700 Height m 98.3 96m Weibull mean speed m/s 9.0 8.9 Weibull A m/s 10 10.08 Weibull K 2.521 8.9 Main wind direction NNE, ENE NNE, ENE figure : ge 2500 Figure GE 1,7 Noise: The noise caused by wind turbines and specially in by a wind farm is an important element of the acceptance, or refusal, of these machines by neighboring populations where it can be a source of annoyance and perturbations. It should therefore be assessed, with special care, during public inquiries; And then checked, after start-up of the machines, by measurements in the field. METTRE LE COMPOSANT QUI FAIT LE BRUITThanks to Windpro, we can perform noise calculations for all the farm. In order to do that, we indicated to the software the average wind speed at this point, but also the height at which we wanted our measurements (the hub), with the help of de wind turbine technical characteristic from the manufacturer. we were able to obtain the results (ANNEXE) in the form of a map in figure It is then found that at the foot of the wind turbine, there is between 50 and 100 decibels of noise, which corresponds to the noise of a washing machine. But when one moves away from it, the noise falls below 35 decibels, which simply corresponds to the noises normally heard in fields or in a forest. It can be concluded that, choosing this clear empty field was a very good idea, even with the existence of a small inhabitant village at 3km nearby, the farm will not be hampered by the noise of wind turbines. This is why we would have the right to install the wind turbines. Having not found the legislation for the distances from the residential premises in Algeria. Distances from some European countries can be given for example. in France, it is not allowed to install a wind turbine within 500m of a dwelling, Denmark and Sweden, the limit is 300m. Shadow: As introduced on the ZVI section. The rotation of the blades causes a periodic interruption of the sunlight (stroboscopic effect) which may possibly be unpleasant. This phenomenon can easily be anticipated. It is highlighted when the sun is low and when the sky is clear of any cloud. The periods of this phenomenon are generally very short and can be seen only near wind turbines. Using windpro, assumptions for shadow calculations are set up as following: -Calculate only when more than 20 % of sun is covered by the blade -Minimum sun height over horizon for influence 3  ° -Day step for calculationà ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨1 days -Time step for calculation à ¢Ã¢â€š ¬Ã‚ ¨1 minutes The calculated times are worst case given by the following assumptions: -The sun is shining all the day, from sunrise to sunset -The rotor plane is always perpendicular to the line from the WTG to the sun -The WTG is always operating A ZVI (Zones of Visual Influence) calculation is performed before flicker calculation so non-visible WTG do not contribute to calculated flicker values. A WTG will be visible if it is visible from any part of the receiver window. Ones again the we can confirm the good choice of this area, the shadow flickering provided from the wind turbine is out of all king of disruption, where even the near village at 3km down the wind farm wont be exposed by the shadow, the only disadvantage is the flicker on the road nearby where we can see from 10 to 30 hours per year in the worst case but we can conclude that even with that, it will not cause any problems at all. ZVI: The installation of wind turbines modifies the landscape. Given their large size, they mark space and are part of a logic of good landscape integration. Wind turbines need to be placed in sites exposed to the wind. The degree of visibility is influenced by factors such as the type of landscape, the number and design of wind turbines, the way they are arranged on the farm, their color and the number of blades. Other aspect of the visual impact that will be discuss in the next section is the shadow flickering; During rotation, the blades must cast shadows intermittently, resulting in a flicker or blinking effect on the surrounding area. This effect can cause problems for the population close to the wind farms. Its intensity depends on the rotor speed and direction, the number of hours of sunshine and the geographical location of the installation. Assumptions done using WindPro for ZVI calculation are as follow: -Center for calculation: UTM (north)-WGS84 Zone: 30 East: 787,969 North: 3,152,257 -Width of calculation area: 5,118 m -Height of calculation area: 4,893 m -Calculation stepà ¢Ã¢â€š ¬Ã‚ ¨: 25 m -Eye heightà ¢Ã¢â€š ¬Ã‚ ¨:1.5 m -Calculation area: 2,504 ha -Highest relevant visible part of a WTG: Hub height + 1à ¢Ã‚ Ã¢â‚¬Å¾2 rotor diameter -Obstacles used in calculation: 0 -No area objects used in calculation -New WTGs used in calculation: 16 The results of this show that all the 16-wind turbines are visible from the hole calculation area of approximatively 2,500 ha, we can admit that this is one of the biggest disadvantage for having a flat area and specially where it can be visible for the near village situated at 3km down the wind farm , but à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦ IL FAUT VOIR LA LIMITE

South-Western Federal Taxation: Comprehensive Volume

CHAPTER 21 PARTNERSHIPS SOLUTIONS TO PROBLEM MATERIALS | | | | |Status: | Q/P | |Question/ |Learning | | |Present |in Prior | |Problem |Objective |Topic | |Edition |Edition | | | | | | | | | | | | LO 1Partnership definitionNew 2LO 2General partnership versus LLCNew 3LO 1Check-the-box regulationsNew 4LO 2Partnership tax reportingModified1 5LO 2Analysis of Income scheduleModified1 6LO 2Partnership Schedule M-3New 7LO 3Special allocationsNew 8LO 3Capital accountsNew 9LO 3Inside versus outside basisNew 10LO 4Comparison of corporate and partnershipUnchanged2 treatment 11LO 4Application of  § 721New 12LO 4Exceptions to  § 721New 13LO 4Disguised sale issue recognitionUnchanged4 14LO 5Initial costs of a partnershipNew 15LO 6Cash accounting method for partnershipsNew 16LO 7Economic effect testUnchanged8 7LO 8Adjustments to partner’s basisUnchanged9 18LO 8Liability allocations to basisUnchanged10 19LO 10Guaranteed paymentsNew 20LO 8, 9, 14Partnership advantages and disadvantagesUn changed12 21LO 4, 6, 7,Partnership formation and operationsUnchanged13 8, 9, 10issues 22LO 11Basis in distributed propertyUnchanged14 23LO 11Distribution ordering rules; liquidatingNew versus nonliquidating distributions 24LO 11Conceptual: tax results of distributionsNew 25LO 12Ramifications of sale of a partnership interestNew Instructor: For difficulty, timing, and assessment information about each item, see p. 1-4. | | | | |Status: | Q/P | |Question/ |Learning | | |Present |in Prior | |Problem |Objective |Topic | |Edition |Edition | | | | | | | | | | | | 6LO 4Formation of partnership; inside and basisUnchanged15 27LO 4, 14Formation of partnership; inside and outsideUnchanged16 outside basis 28LO 4Contribution of various properties onUnchanged17 formation of a partnership; basis and depreciation 29LO 4Formation of a partnershipNew 30LO 4Formation of a partnershipNew 31LO 4, 8, 14Basis of property received as gift; receipt Modified19 of interest for services 32LO 8, 14Planning fo r service interestsNw 33LO 4, 10, 14Disguised sale versus distributionUnchanged20 *34LO 4, 7Treatment of contributed propertyNew 5LO 5Tax issues related to formation ofUnchanged5 partnership 36LO 4, 5, 6,Preparation of initial LLC tax returnUnchanged6 37LO 6Accounting methodsUnchanged7 *38LO 5Definition of organization costs;Unchanged21 amortization of organization costs *39LO 6Computation of partnership’s required taxUnchanged24 year under the least aggregate deferral method 40LO 4, 7Date basis of partner’s interest; gain on saleUnchanged25 of contributed land with precontribution built-in gain 41LO 7Date basis of partner’s interest; loss on saleUnchanged26 of contributed land *42LO 7, 8Computation of partner’s outside basis atModified27 beginning and end of year when several transactions took place *43LO 7, 8Partnership income; partner’s basis;Modified28 separately stated items; guaranteed payments 44LO 7, 8, Partnership income; partner’s basis; lossModified29 10,limitations; guaranteed payments 45LO 4, 7, 8Partnership’s income and separately statedUnchanged30 items; partner’s basis and amount at risk 6LO 4, 7, 8Same as Problem 45 for an LLCModified31 47LO 7, 8, 9,Basis and loss limitationsUnchanged32 *48LO 4, 7, 8,Allocations under  § 704(b)Modified33 9 49LO 7, 8, 9Allocation of gain under  § 704(b)Modified33 50LO 7, 8, 9Allocations to partner; basis in interest; Unchanged34 loss limitations 51LO 8Allocation of recourse debtUnchanged35 52LO 4, 8Sharing recourse debt for basis purposesUnchanged36 Instructor: For difficulty, timing, and assessment information about each item, see p. 21-4. | | | |Status: | Q/P | |Question/ |Learning | | |Present |in Prior | |Problem |Objective |Topic | |Edition |Edition | | | | | | | | | | | | 3LO 8, 9, 14Basis calculations and loss limitationsUnchanged11 54LO 8, 9Loss disallowance under  § 704(d),  § 465,Unchanged37 and  § 469 55LO 7, 10Timing of recognition of guaranteedModified38 payments 56LO 10Timing of recognition of guaranteed New payments, continued *57LO 7, 10Comparison of C corporation salary versus Unchanged39 partnership guaranteed payment 58LO 10Disallowed  § 267 loss from sale of propertyUnchanged40 to partnership by partner; conversion f capital gain to ordinary income from sale of investment property to partnership by partner 59LO 11Nonliquidating distribution; basis of New assets distributed (limited); partner’s outside basis 60LO 11Nonliquidating distribution; basis of New assets distributed (limited); partner’s outside basis *61LO 11Nonliquidating distributions; amount andModified43 nature of gain or loss; basis of assets distributed; partner’s outside basis *62LO 11Allocation of basis to multiple assetsUnchanged44 distributed 3LO 11Effect of change in partner’s share of New liabilities; nonliquidating versus liquidating distributions 64LO 11Results of various liquidating distributionsUnch anged45 65LO 12Sale of partnership interest; amount andModified46 nature of gain or loss; basis of new partner’s interest; election to adjust basis of partnership property *The solution to this problem is available on a transparency master. Instructor: For difficulty, timing, and assessment information about each item, see p. 21-4. | | | |Status: | |Q/P | | Research | | | |Present | |In Prior | |Problem | |Topic | |Edition | |Edition | | | | | | | | | 1Economic effect allocationsUnchanged1 2Allocation of liabilitiesNew Internet activityUnchanged3 | | |Est'd | |Assessment Information | | |Question/ | |completion |AICPA* | AACSB* | |Problem |Difficulty |time |Core Comp | Core Comp | | | | | | | | | | 2 |Easy | |10 |FN-Reporting |Analytic | | 3 | |Easy | |10 |FN-Reporting |Analytic | | 4 | |Easy | |10 |FN-Reporting |Analytic | | 5 | |Medium | |10 |FN-Reporting |Analytic | | 6 | |Medium | |10 |FN-Reporting |Analytic | | 7 | |Easy | |10 |FN-Reporting |Analytic | | 8 | |Medium | | 10 |FN-Reporting |Analytic | | 9 | |Easy | |10 |FN-Reporting |Analytic | | 10 | |Medium | |10 |FN-Reporting |Analytic | | 11 | |Easy | |10 |FN-Reporting |Analytic | | 12 | |Medium | |10 |FN-Reporting |Analytic | | 13 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 14 | |Medium | |10 |FN-Reporting |Analytic | Reflective Thinking | | 15 | |Medium | |10 |FN-Reporting |Analytic | | 16 | |Easy | |10 |FN-Reporting |Analytic | | 17 | |Easy | |10 |FN-Measurement |Analytic | | 18 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 19 | |Easy | |10 |FN-Reporting Analytic | | 20 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 21 | |Medium | |15 |FN-Reporting |Analytic | | 22 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 23 | |Easy | | 5 |FN-Measurement | FN-Reporting |Analytic | | 24 | |Easy | | 5 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 25 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 26 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 27 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 28 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 29 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 30 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 31 | |Hard | |15 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | | |*Instructor: See the Introduction to this supplement for a discussion of using AICPA and AACSB core competencies in assessment. | | 32 | |Medium | |10 |FN-Reporting |Analytic | Reflective Thinking | | 33 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 34 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 35 | |Medium | |10 |FN-Measurement | FN-Reporting Analytic | Reflective Thinking | | 36 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 37 | |Medium | |10 |FN-Repo rting |Analytic | | 38 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 39 | |Medium | |10 |FN-Reporting |Analytic | | 40 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 41 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 42 | |Medium | |20 |FN-Measurement | FN-Reporting |Analytic | | 43 | |Hard | |15 |FN-Measurement | FN-Reporting |Analytic | | 44 | |Hard | |15 |FN-Measurement | FN-Reporting |Analytic | | 45 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 46 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 47 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 48 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 49 | |Hard | |10 |FN-Measurement FN-Reporting |Analytic | | 50 | |Hard | |15 |FN-Measurement | FN-Reporting |Communication | Analytic | | 51 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 52 | |Hard | |15 |FN-Measurement | FN-Reporting |Communication | Analy tic | | 53 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 54 | |Hard | |15 |FN-Measurement | FN-Reporting |Communication | Analytic | | 55 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | | |*Instructor: See the Introduction to this supplement for a discussion of using AICPA and AACSB core competencies in assessment. | 56 | |Medium | |10 |FN-Reporting |Analytic | | 57 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 58 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 59 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 60 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 61 | |Medi m | |10 |FN-Measurement | FN-Reporting |Analytic | | 62 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 63 | |Medium | | 5 |FN-Measurement | FN-Reporting |Analytic | | 64 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 65 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | | |*I nstructor: See the Introduction to this supplement for a discussion of using AICPA and AACSB core competencies in assessment. | CHECK FIGURES 26. a. $0; $0. 26. b. $200,000. 26. c. $100,000. 26. d. $100,000 basis in property. 27. a. ($15,000) realized; $0 recognized. 27. b. $60,000. 27. c. $75,000. 27. d. $75,000. 27. e. Sell and contribute cash. 28. a. $20,000 on land; $60,000 on equipment. 28. b. No gain under  § 721. 28. c. Carol $70,000; Connie $30,000. 28. d. $40,000 basis in land; $30,000 basis in equipment. 28. e. Inside = Outside = $100,000. 28. f. Partnership continues Connie’s depreciation schedule. 29.No gain or loss to Justin, Tiffany, or partnership; Justin’s basis $85,000; Tiffany’s basis $125,000; partnership’s basis in land $65,000; partnership steps into Tiffany’s shoes for depreciation. 30. Tiffany recognizes $25,000 loss on sale; basis is $100,000. Partnership must spend additional $10,000 to acquire assets. 31. a. $0. 31. b. $ 50,000. 31. c. $25,000 ordinary income. 31. d. $75,000. 32. b. Contribute ‘‘property’’ of ‘‘permits’’ and ‘‘development plan’’ completed before contribution. 33. a. Distribution. 33. b. $0 gain or loss. 33. c. $50,000. 33. d. Disguised sale. 33. e. $16,667. 33. f. $66,667. 34. a. Rachel $360,000; Barry $600,000. 34. b. 170,000 ordinary income. 34. c. $100,000 capital loss and $20,000 ordinary loss. 35. Organization costs $10,000 (deducted); start-up costs $60,000 (amortized over 180 months); property acquisition costs $24,000 (added to property basis; depreciated as newly acquired asset); syndication costs $1 million (nondeductible). 36. Issues include partnership year end; partnership accounting method; treatment of initial costs; partners’ bases in LLC interests; LLC’s basis in property received on formation; interests issued in exchange for services; built-in gain on later sale of land. 37 . BR can use cash, accrual, or hybrid method in 2008, 2009, and 2010.In 2011 and later years, BR may no longer use cash method. 38. a. Organizational costs: $8,000; syndication costs $10,000. 38. b. $5,000 deduction plus $50 amortization of organization costs. 38. c. 180-month amortization. 39. January 31. 40. a. $75,000. 40. b. Five years. 40. c. $15,000 gain. 41. a. $36,000 loss; $30,000 to Reece and remaining $6,000 allocated equally among partners. 42. a. $160,000. 42. b. $230,000. 43. a. $42,000; qualified dividends $4,000. 43. b. $29,000 basis. 43. c. $22,000 basis. 44. a. ($18,000); qualified dividends $4,000. 44. b. $0 basis; $8,000 loss deductible currently, $1,000 suspended. 44. c. $0 basis; $1,000 loss allowed; $8,000 suspended. 45. a. 175,000 (Celeste); $125,000 (Ernestine). 45. b. Ordinary income $80,000; qualifying dividend $3,000; tax-exempt interest $1,000; charitable contribution $500; distribution to Celeste $20,000. 45. c. $283,500 basis and at-risk amount. 46. a. Accounts payable are nonrecourse for LLC. 46. b. $283,500 basis; $233,500 amount at risk. 47. a. $24,000. 47. b. $4,000. 47. c. $0. 47. d. $4,000. 47. e. Don can contribute capital or partnership can incur debt. 48. a. Year 1—Fred $49,600; Manuel $78,400. Year 2—Fred $960; Manuel $75,840. 48. b. Yes. 49. a. Gain $43,200 allocated equally. Basis—Fred $22,560, Manuel $97,440. 49. b. Fred’s cash $22,560; Manuel’s cash $97,440. 49. c.Tax savings now or cash later; not both. 50. Deduct $54,000 of loss unless basis increased before year-end. 51. Melinda $6,000; Gabe $6,000; Pat $18,000. 52. Paul $160,000; Anna $80,000. 53. a. Basis adjustment rules per Figure 21. 3; then loss limitation rules [ § 704(d),  §Ã‚  465, then  § 469]. 53. b. $5,000 gain, $0 basis. 53. c. No loss deduction. 53. d. Make distribution next year so Brad can deduct loss this year. Partnership can incur additional debt. 54. $48,000 deducted. $14,000 suspended— § 704(d ); $8,000 suspended— § 469. 55. a. $70,000 in 2010, incl. guaranteed payment. 55. b. $25,000 in 2010. 56. $70,000. 57. a. $55,000 salary in 2010. 57. b. 0 in 2010; $40,000 partnership income and $60,000 guaranteed payment in 2011. 58. a. $0. 58. b. $10,000. 58. c. $80,000 gain; may be ordinary. 59. a. $0. 59. b. $0. 59. c. Inventory $60,000; land $75,000; partnership interest $185,000. 60. a. $0. 60. b. $0. 60. c. Account receivable $0; land $20,000; partnership interest $0. 61. a. $15,000 gain and basis in partnership interest $0; partnership $0 gain. 61. b. Land $30,000 basis and basis in partnership $10,000; partnership $0 gain. 61. c. No gain or loss; land basis $12,000; basis in partnership interest $0. 61. d. $10,000 gain; $0 basis in inventory; $0 basis in partnership interest. 62. a. No gain or loss. 62. b. 6,000 in item 1 and $3,000 in item 2. 63. a. Inventory basis $10,000; basis in partnership interest $20,000. 63. b. Recognized loss $20,000; Inventory basis $10, 000. 64. a. $15,000 capital gain. 64. b. No gain or loss; $40,000 basis. 64. c. No gain or loss; inventory $10,000; capital asset $22,000. 64. d. $0 basis in accounts receivable; $60,000 capital loss. 65. a. $100,000 realized. 65. b. $30,000 ordinary income. 65. c. $20,000 capital gain. 65. d. $100,000 basis. DISCUSSION QUESTIONS 1. A partnership is an association of two or more persons (including individuals, trusts, estates, corporations, other partnerships, etc. ) formed to carry on a trade or business.Each partner contributes money, property, labor or skill, and each expects to share in profits and losses. The entity must not otherwise be classified as a corporation, trust, or estate. p. 21-3 2. In a general partnership, all partners are â€Å"general partners† who are jointly and severally liable for partnership debts, including liabilities arising from tort or malpractice judgments against the general partnership. A general partner bears liability for these debts even i f the partner was not personally involved in the malpractice. A limited liability company has the corporate attribute of limited liability for the owners (called â€Å"members† in an LLC), but an LLC is treated as a partnership for tax purposes.In a properly-structured LLC, none of the members are personally liable for entity debts. State law governs the types of entities that may be established as LLCs. Most states permit capital-intensive entities to use this form of business, but they do not permit personal-service entities to be treated as LLCs. pp. 21-3 and 21-4 3. By default, a newly-formed noncorporate entity with two more owners is treated as a partnership under the check-the-box Regulations. The entity may â€Å"check-the-box† on Form 8832 to elect, instead, to be taxed as a corporation. p. 21-4 4. A partnership is not a tax-paying entity; however, it must still file a tax return.The partnership reports its income and expenses on Form 1065. Partnership income is comprised of income from operations and separately stated income and expenses. The income and expenses from operating activities are reported on Page 1 of the Form 1065. A separately stated item is any item (income or expense) that could differently affect the tax liabilities of different partners. Separately stated items are reported in the partnership return on Schedule  K. The partners must pay the tax on the partnership income. The partnership’s income and separately stated items are reported to each partner on a Schedule K-1 prepared for that partner. pp. 21-4 to 21-7 5.Because it is not a tax-paying entity, a partnership does not report â€Å"taxable income. † However, it must still reconcile between the tax return and the books. The partnership prepares the Analysis of Net Income (Loss) (page 5 of Form 1065) to determine what might be called the partnership’s â€Å"taxable income equivalent. † Certain amounts shown on Schedule K are netted and entered on the Net Income (loss) line of this Analysis. This â€Å"taxable income equivalent† is reconciled to book income on Schedule M-1 or Schedule M-3 of the partnership’s return. This is similar to the corporate reconciliation (also on Schedule M-1 or M-3) in Form 1120; however, for a partnership, the â€Å"taxable† amount must be derived as described above. pp. 1-5 to 21-7 6. Schedule M-3 is filed (in lieu of Schedule M-1) by â€Å"larger† partnerships to report a detailed reconciliation between the partnership’s book and tax income. In addition, these partnerships must file Schedule C to answer various questions regarding the partnership’s changes of ownership, reporting, or other activities during the year. This reconciliation is designed to highlight differences between GAAP basis reporting (per an SEC filing or an audited financial statement) and tax basis income. A partnership is generally required to file Schedule M-3 if it has $10 million or more in assets or $35 million or more in total receipts.In addition, it must file Schedule M-3 if any partner owns a 50%-or-greater interest in partnership profits, losses, or capital, and if that partner meets either the $10 million (assets) or $35 million (receipts) threshold. pp. 21-6 and 21-7 7. A special allocation is an amount that is allocated differently from the general profit or loss sharing ratios specified in the partnership agreement. For pre-contribution gain or loss property, special allocations are required to be made to eventually bring the partners’ tax bases in line with their book-value capital accounts. Orange, LLC, can offer a preferential special allocation of profits and cash flows to Green to compensate the company for use of its capital.The LLC can offer a guaranteed payment (rather than a special allocation) to Rose for her managerial time and expertise. Upon sale of the appreciated property contributed by Rose,  §Ã‚  704(c) require s the precontribution gain to be allocated to her. pp. 21-8, 21-24, and 21-36 8. A partner’s capital account is a mechanical determination of the partner’s financial interest in the partnership, as determined using one of several possible accounting methods, including tax basis, GAAP,  §Ã‚  704(b) book basis, or some other method defined by the partnership. The capital account reflects contributions and distributions of cash or other property to or from the partner.In addition, it accumulates the partner’s share of increases and decreases from operations, including amounts that are otherwise tax-exempt or nondeductible. Even if capital accounts are determined on a tax basis, a partner’s capital account usually will differ from the partner’s basis in the partnership interest because (among other reasons) the capital account does not include the partner’s share of partnership liabilities. p. 21-8 9. The â€Å"inside basis† is the part nership’s tax basis for the assets it owns. The â€Å"outside basis† is a given partner’s tax basis in the partnership interest. On formation of a partnership, the total of all partners’ outside bases will equal the partnership’s inside bases of all of its assets. p. 21-8 10.As a general rule, both  §Ã‚ §Ã‚  721 and 351 provide that no gain or loss is recognized when property is transferred on the formation of a partnership or corporation. However,  §Ã‚  351 applies only if those persons transferring property to a corporation are in control of the corporation immediately after the exchange, whereas  §Ã‚  721 does not include a control requirement. Section 721 not only applies to initial transfers in forming the partnership but to all subsequent contributions from any partner. Similarities exist between  §Ã‚ §Ã‚  721 and 351 in that these nonrecognition provisions do not apply to all transfers made by the owners. Under  §Ã‚  721, the contr ibutor must receive an interest in the partnership, while under  §Ã‚  351, the transferor must receive stock in the corporation.Under both  §Ã‚ §Ã‚  721 and 351, if the transfer of property involves the receipt of money or other consideration, the transaction may be deemed a sale or exchange rather than a tax-free transfer. pp. 21-9 to 21-11, and Concept Summary 21. 1 11. In general, on formation of a partnership, no gain or loss will be recognized by either the partnership or the contributing partners [ §Ã‚  721]. Bobbi will not recognize the realized gain related to the land she is contributing. Similarly, BC will not recognize a gain or loss. Bobbi’s basis in the land will carry over to BC. Bobbi’s basis in BC will be a substituted basis equal to her basis in the contributed land. If the land Bobbi contributes is ever sold by BC, the precontribution gain must be allocated to Bobbi [ §Ã‚  704(c)]. pp. 21-9, 21-10, and Example 24 12.Under the general rule of à ‚ §Ã‚  721(a), no gain or loss is recognized on formation of a partnership. This rule does not apply in at least four situations. Realized gain or loss is recognized if: †¢ The entity is an investment partnership, †¢ The partner received the interest in the partnership in exchange for services, †¢ The transaction can be viewed as an exchange of properties (e. g. , properties are contributed to the partnership and soon thereafter are distributed to other partners with the intent of taking advantage of the basis rules of  §Ã‚  731 for distributed property), and †¢ The transaction can be viewed as a disguised sale of the property from the partner to the partnership or one of the other partners. pp. 21-10 to 21-11 13. a.If a contribution of property to a partnership is followed shortly thereafter by a distribution of cash to that partner, the IRS may recharacterize the transactions as a disguised sale of the property. In this case, Gerald would be treated as contri buting 75% of the property and selling the remaining 25% for cash [$60,000 sales price (distribution amount) ? $240,000 property value]. He would recognize $30,000 of gain on the deemed disguised sale [$60,000 deemed selling price less $30,000 basis ($120,000 ? 25%)]. b. The parties could use any of several techniques to minimize the possibility that the IRS will recharacterize the transaction as a sale. First, the distribution could be proportionate to all the partners. Second, the contribution should not be contingent on the later distribution of cash.Third, even if cash is required to ensure the contribution, the distribution should not be contingent on the partnership achieving a certain level of profits. Fourth, the distribution could be made in stages over a longer (say, three-year) time period. Here, it may be viewed as being a reasonable return of Gerald’s capital (e. g. , each $20,000 payment represents a 10% return on his capital). Finally, the distribution could be deferred until two years following the capital contribution. pp. 21-11, 21-12, and Example 12 14. In its initial year, a partnership will typically incur organizational and startup expenses. If property is contributed to the partnership, the entity may incur costs related to transferring the title of the property.If the partnership interests are sold to investors, the partnership might incur syndication costs. Once the partnership has started business, it will incur ordinary and necessary business expenses; these expenses are deductible under  §Ã‚  162. Organizational and startup costs are generally deductible to the extent of the first $5,000 of such costs. This deductible amount is reduced to the extent the total of such costs (in the respective category) exceeds $50,000. Any portion that is not deductible is amortized over 180 months, beginning with the month in which the partnership begins business. The cost of selling the partnership interests to investors is treated as a sy ndication cost under  §Ã‚  709. Such expenses are not deductible.The cost of transferring title to an asset is treated as an acquisition cost related to the asset; this amount will be treated as a new asset placed in service when incurred, and it will be depreciated using the same method and life as the underlying property. (If this underlying property was contributed by a partner, that property will be depreciated by continuing the depreciation schedule used by the contributing partner. The partnership â€Å"steps into the shoes† of the contributing partner in calculating depreciation deductions. ) pp. 21-15 and 21-16 15. A partnership may generally use the cash method of accounting unless it is a tax shelter or has one or more partners that are subchapter C corporations.The C corporation partner will not preclude use of the cash method of accounting if that corporation is a qualified personal service corporation or if it is engaged in the farming business. In addition, a subchapter C corporate partner will not preclude use of the cash method if the partnership has never had â€Å"average annual gross receipts† in excess of $5 million, for any year beginning in 1986 or later years. Average annual gross receipts is calculated by averaging the taxpayer’s gross receipts for the three years prior to the tax year in question or for the period of the taxpayer’s existence, if shorter. p. 21-17 16. The three rules of the economic effect test are designed to ensure that a partner bears the economic burden of a loss or deduction allocation and receives the economic benefit of an income or gain allocation.By increasing the partner’s capital account by the gain or income allocated to the partner, the rule ensures that a positive capital account partner will receive an allocation of assets equal to the balance in the partner’s capital account when the partner’s interest is eventually liquidated. If the partner has a negat ive capital account, an allocation of gain or income to the partner reduces the amount of the negative capital account and, therefore, the amount of the deficit capital contribution that is required from the partner upon liquidation. In short, a dollar of income or gain increases the partner’s capital account by a dollar and, everything being equal, the partner should receive a dollar more upon liquidation (or contribute a dollar less to restore a deficit in the capital account). Allocations of losses and deductions affect the partner in the opposite manner as income or gain.Therefore, the allocation of a dollar of loss or deduction reduces the partner’s capital account by a dollar and, everything being equal, reduces the amount the partner will receive upon liquidation (or increases by a dollar the partner’s deficit capital restoration requirement). p. 21-23 and Example 22 17. Under  § 722, a partner’s initial basis is determined by reference to the am ount of money and the basis of other property contributed to the partnership. This basis is increased by any gain recognized under  § 721(b) and the partner’s share of any partnership liabilities. Basis is decreased by any partner liabilities assumed by the partnership.Basis is also adjusted to reflect the effect of partnership operations: it is increased by the partner’s share of taxable and nontaxable income and is decreased by the partner’s share of loss and nondeductible/noncapitalizable expenses. Certain adjustments for depletion are also made. Finally, a partner’s basis is increased by additional contributions to the partnership and by increases in the partner’s share of partnership debt. Basis is decreased by distributions from the partnership and decreases in the partner’s share of partnership debt. A partner’s basis is adjusted any time it may be necessary to determine the basis for the partnership interest, for example, wh en a distribution was made during the taxable year, or at the end of a year in which a loss arises. A partner’s basis may never be reduced below zero (i. e. , no negative basis). Figure 21. 3 18.The partnership’s debts are allocated to the partners in determining the partners’ bases in their partnership interests. Any increase in partnership liabilities is treated as a cash contribution to the partnership, thereby increasing the partners’ bases. Any decrease in partnership liabilities is treated as a distribution from the partnership to the partners and decreases their bases. Partnership debt is allocated differently depending on whether it is recourse to the partners or nonrecourse. Recourse debt is allocated in accordance with the constructive liquidation scenario. Under this test, all partnership assets are deemed to be worthless.The losses that would arise are allocated to the partners according to the partnership agreement. The losses would create ne gative capital accounts for at least some of the partners; those partners are deemed to contribute that amount of cash (equal to the negative capital balance) to the partnership in settlement of the obligation to repay partnership’s recourse liabilities. The amount of that deemed capital contribution is the amount of the partner’s share of the recourse liabilities. Nonrecourse debt is allocated in a three-tier system. First, allocate any gain related to assets where the debt exceeds the partnership’s â€Å"book† basis in the assets. This is called minimum gain and is allocated according to the partnership agreement.Next, any debt related to any remaining precontribution gain is allocated to the partner who contributed the encumbered property to the partnership. Finally, any remaining debt is allocated in accordance with the method specified in the partnership agreement. pp. 21-28 and 21-29 19. A guaranteed payment is an amount paid to a partner for the pe rformance of services or for the use of the partner’s capital. These payments are in the nature of salary or interest payments that are made by other entities, but the tax treatment of guaranteed payments is somewhat different. Like payments made by other entities, guaranteed payments are generally deductible by the partnership, and can result in a loss to the entity. Guaranteed payments are taxed as ordinary income to the recipient partner.Unlike salary and interest payments made by other entities, guaranteed payments are treated as if they were received by the partner on the last day of the partnership’s tax year. If the partner and partnership have different tax years, there will be a deferral between the time the partnership claims the deduction and the time the partner reports the income. Guaranteed payments are treated as self-employment income by the recipient partner. pp. 21-36 and 21-37 20. A partnership is advantageous under any of the following conditions: à ¢â‚¬ ¢ Special allocations of income, expenses, cash flows, etc. can be made by the entity owners. †¢ The entity has taxable losses which the owners can utilize on their individual tax returns. †¢ The partnership generates net passive income which offsets passive losses of the owners. The entity operated as a Subchapter C corporation and would be required to report taxable income since other means of reducing such income (e. g. , interest, rents, salaries to owners) have been maximized and are not available. †¢ The entity cannot qualify under the requirements for a Subchapter S election (e. g. , too many shareholders, nonqualifying shareholders, more than one outstanding class of stock, etc. ) †¢ The entity will exist for only a short period of time and, if a corporation, its liquidation will result in a large tax due to the appreciation in its assets. †¢ Several other advantages may exist. The disadvantages of the partnership entity form arise when: The ent ity income is significant and will be taxed at higher individual rates than if accumulated in the corporation. †¢ The entity is in a high risk business and the owners require protection from personal liability. An LLC or LLP may be useful in such situations. pp. 21-51, 21-52, and Concept Summary 21. 5 21. a. False. The entity is required to file an information return, generally by the fifteenth day of the fourth month after the end of the partnership’s tax year. The return includes data concerning the partners’ allocable shares of the financial activities of the partnership. In addition, property, sales, and employment tax returns are likely to be required of the entity. p. 21-6 b. False.Generally no gain or loss is recognized, but there are exceptions to  § 721, including those pertaining to the receipt of boot, the contribution of property with liabilities in excess of basis, and the receipt of a partnership interest in exchange for services provided to the pa rtnership. pp. 21-10 and 21-11 c. False. The partner recognizes ordinary income, to the extent of the fair market value of the partnership interest that is received in this manner. p. 21-11 d. False. If property which was inventory in the hands of the transferor partner is sold by the partnership within five years of the date it was contributed, any gain will be treated as ordinary income, regardless of the manner in which the property was held by the partnership. p. 21-13 e. False. The partnership chooses tax accounting periods and methods that are applied to all of the partners. p. 21-15 f. False.An alternative tax year will never be required by the IRS; instead, the partnership must request permission from the IRS and may have to illustrate to the IRS that it has a business purpose for using an alternative tax year. p. 21-19 g. True. Built-in losses, as well as gains, must be allocated to the contributing partner when recognized by the partnership. pp. 21-24 and 21-25 h. True. pp . 21-27 to 21-29 i. True. p. 21-33 j. False. Such losses can be deducted by partners who hold a 50% or less ownership interest in the entity. p. 21-38 22. Generally, a taxable gain arises on a proportionate distribution only when cash is received in excess of the distributee partner’s basis in the partnership interest. As a relief of liabilities is treated as a distribution of cash, a decrease in a partner’s share of liabilities may also trigger a taxable gain.Similarly, certain distributions of marketable securities are treated as distributions of cash and can result in gain recognition. Other transactions, such as disguised sales and distributions related to precontribution gain property, might also result in gain recognition by the distributee partner. pp. 21-41 and Examples 51, 52 and 57 23. In either a current or liquidating distribution, assets are distributed in the following order: 1)  cash, 2) ordinary-income producing (hot) assets, and 3) other assets. Cash . In either a current or liquidating distribution, a cash distribution in excess of the partner’s basis triggers a gain (typically a capital gain). Cash (and certain items treated as cash) is the only asset for which a distribution might trigger a gain. Hot assets.In either a current or liquidating distribution, the partner’s basis in distributed hot assets equals the lesser of the partner’s basis in the partnership interest (after any cash distributions) or the partnership’s basis in the hot asset. In a liquidating distribution, the partner can claim a loss equal to any basis remaining after these hot assets are distributed, if no â€Å"other assets† will be distributed. In a current distribution, no loss can be deducted. Other assets. In a current distribution, â€Å"other assets† are treated similarly to hot assets: the basis equals the lesser of the partner’s basis in the partnership interest (after any cash and hot asset distribu tions) or the partnership’s basis in the asset. In a liquidating distribution, â€Å"other assets† absorb any remaining basis in the partnership interest after cash and hot assets are accounted for.For either a current or liquidating distribution, if â€Å"other assets† are distributed, the partner cannot recognize a loss. Examples 54, 57, 59, and 60 24. The partnership distribution rules reflect the aggregate theory of taxation. With respect to property ownership, the partner can be seen as an extension of the partnership. Ownership of property by the partner generally produces the same result as ownership by the partnership (and vice versa). The result is a carryover basis in distributed property with a preservation of the character of distributed property. The distribution rules operate with the goal of deferring tax on the distribution, while preserving the ordinary income potential.No gain or loss is recognized if an adjustment can be made to the basis of t he distributed property, without reducing the amount of ordinary income the partner will eventually recognize. So, gain is recognized if cash distributions exceed basis, because there is no asset for which the basis can be reduced. The basis of hot assets can be decreased, but not increased, in a distribution because the inherent ordinary income cannot be decreased. Similarly, loss can be recognized if only cash and â€Å"hot† assets are received in a liquidating distribution, because the basis in these types of assets cannot be increased to absorb the partner’s remaining basis. pp. 21-40 and 21-41 25.Jody must determine her gain or loss on the sale of the partnership interest. If the partnership owns â€Å"hot assets,† she must recognize ordinary income or loss to the extent of her proportionate share of the built-in appreciation or depreciation on these assets. Her remaining gain or loss is adjusted by the ordinary income or loss recognized. If the partnership ’s assets are substantially appreciated, Bill may wish to ask the partnership to make a  § 754 election so he can be allocated a step-up in basis. If the partnership has a substantial built-in loss (assets are depreciated by more than $250,000), the partnership may be required to make a step-down adjustment with respect to Bill’s acquired interest.If Jody sells more than a 50% interest in the partnership, or Bill is the sole remaining member of a two-owner partnership, the entity will terminate on the date the purchase is finalized. This may result in a loss of a favorable tax year or accounting method by the partnership. pp. 21-47 to 21-49 PROBLEMS 26. a. Under  § 721, neither the partnership nor the partners recognizes any gain on formation of the entity. b. Chip will take a cash basis of $200,000 in his partnership interest. c. Marty will take a substituted basis of $100,000 in his partnership interest ($100,000 basis in the property contributed to the entity). d. The partnership will take a carryover basis in the assets it receives ($200,000 basis in cash, and $100,000 basis in property). Example 14 27. a. Liz has a realized loss of $15,000.However,  § 721 contains the general rule that no gain or loss is recognized to a partnership or any of its partners upon the contribution of money or other property in exchange for a capital interest. Since Liz is subject to this rule, she does not recognize the loss. p. 21-10 b. $60,000. Section 722 provides that the basis of a partner’s interest acquired by a contribution of property, including money, is the amount of such money and the adjusted basis of such property to the contributing partner at the time of the contribution. p. 21-12 c. $75,000, the adjusted basis of the contributed property ( § 722). p. 21-12 d. $75,000. Under  § 723, the basis of property to the entity is the adjusted basis of such property to the contributing partner at the time of the contribution, increased by a ny  §Ã‚  721(b) gain recognized by such partner.Since no such gain (and no loss) was recognized by Liz on the contribution, the partnership takes a carryover basis in the property. Example 14 e. A more efficient tax result may arise if Liz sells the property to an unrelated party for $60,000, recognizes the $15,000 loss on the property, and contributes $60,000 cash to the partnership. The partnership could then use the $60,000 to acquire similar property, in which it would take a $60,000 basis. Example 9 28. a. Carol realizes a gain of $20,000 on contribution of the land. Connie realizes a gain of $60,000 on contribution of the equipment. The partnership realizes a gain equal to the value of the property it receives (it has a $0 basis in the partnership interests it issues). b.Under  § 721, neither the partnership nor either of the partners recognizes any gain on formation of the entity. Example 8 c. Carol will take a substituted basis of $70,000 in her partnership interest ($30 ,000 cash plus $40,000 basis in land). Connie will take a substituted basis of $30,000 in her partnership interest ($30,000 basis in the equipment). Example 14 d. The partnership will take a carryover basis in all the assets it receives ($30,000 basis in cash, $40,000 basis in land, and $30,000 basis in equipment). p. 21-12 e. The partners’ outside bases in their partnership interests total $100,000: Carol’s basis of $70,000 plus Connie’s basis of $30,000.This is the same as the partnership’s basis in assets of $100,000 ($30,000 cash plus $40,000 land plus $30,000 equipment). p. 21-12 f. The partnership will ‘‘step into Connie’s shoes† in determining its depreciation expense. It will use the remaining depreciable life and the same depreciation rates Connie would have used. p. 21-12 29. Both partners are contributing assets valued at $100,000. One property has a built-in gain; the other has a built-in loss. Justin and Tiffany recog nize no gain or loss on contribution of their respective properties to the partnership. Justin takes a substituted basis of $85,000 in his partnership interest ($20,000 cash plus $65,000 basis in land). The partnership takes a $65,000 carryover basis in the contributed land.The â€Å"built-in gain† on the land must be tracked and allocated to Justin if the property is ever sold at a gain [ §Ã‚  704(c)]. Section 721 applies to losses as well as gains and prevents Tiffany from recognizing the $25,000 loss on her contribution to the partnership. She will have a $125,000 basis in a partnership interest worth $100,000. Similarly, the partnership will have a $125,000 basis in assets valued at $100,000. The partnership will â€Å"step into Tiffany’s shoes† in determining depreciation deductions. As this is â€Å"built-in loss† property,  §Ã‚  704(c) applies, and amounts related to the built-in loss must be allocated to Tiffany. Depreciation must be allocated in accordance with Reg.  §Ã‚  1. 704-3 (not discussed in detail in this chapter). Basically, a large portion of the depreciation deductions would be allocated to Tiffany to reduce the difference between her basis and the fair market value of her partnership interest as quickly as possible. (If the property basis was less than its fair market value, depreciation would first be allocated to the other partner. )] pp. 21-10, 21-12, 21-13, 21-24, and Example 9 30. Tiffany has a taxable transaction when she sells the assets to a third party. She receives cash of $100,000 in exchange for assets with a basis of $125,000 and recognizes a $25,000 loss. (Based on the facts presented, the loss will likely be a  §Ã‚  1231 loss. ) When Tiffany contributes the $100,000 cash to the partnership, she recognizes no gain or loss and has a basis of $100,000 in her partnership interest.The partnership, of course, has a basis of $100,000 in the cash it receives. The partnership will need to use Tiffa ny’s $100,000 cash contribution, plus $10,000 of the cash Justin contributed to acquire new equivalent assets for $110,000. In this situation, the tax result to Tiffany is improved (she can recognize her $25,000 realized loss), but there is a $10,000 economic cost to the partnership when it acquires equivalent assets for $110,000 instead of $100,000. pp. 21-10, 21-12, 21-13, 21-24, and Example 8 31. a. None. Under  § 721, neither the partnership nor any of the partners recognize gain on contribution of property to a partnership in exchange for a partnership interest. b. $50,000.Ben’s basis in his partnership interest will equal the basis he held in the property he inherited from his father. The basis a beneficiary takes in property received from an estate generally equals the fair market value of the asset at the date of death or at the alternate valuation date (6 months later) if available and elected. p. 21-26 c. Beth will recognize $25,000 of ordinary income. The fair market value of Beth’s 50% partnership interest is $75,000. Since Beth will contribute only $50,000 of property, the difference between the amount contributed and the value of the interest will be treated as being for services rendered to the partnership. Services do not constitute ‘‘property’’ for purposes of  § 721 nonrecognition treatment. p. 21-11 d.Beth’s basis in her partnership interest will be $75,000 [$50,000 (cash contributed) + $25,000 (the amount of ordinary income recognized for services rendered to the partnership)]. Example 13 32. a. Assets Basis    FMV Cash $ 50,000 $ 50,000 Land50,00075,000 Land improvements 25,000 25,000 Total assets$125,000$150,000 Ben’s capital $ 50,000 $ 75,000 Beth’s capital 75,000 75,000 Total capital$125,000$150,000 Note that the partnership will capitalize the $25,000 deemed payment for Beth’s services, since the services relate to a capitalizable expenditure. The partners hip will reflect this $25,000 in ‘‘cost of lots sold† as the development lots are sold. b.Beth could prepare a development plan and secure zoning permits before the partnership is formed. She could then contribute these plans and permits to the partnership in addition to the $50,000 cash. Since a completed plan would be considered â€Å"property,† no portion of her partnership interest would be received in exchange for services if this were done. The entire transaction would be considered under  § 721. p. 21-12 33. a. Under general guidelines, the $50,000 would be treated as a distribution, which, since it does not exceed Ben’s basis in his interest, would not be taxable. The distribution would reduce Ben’s basis in his partnership interest by $50,000. b. None. c.The partnership would take a basis of $50,000 in the land, Ben’s basis in the property at the time of the contribution. d. The IRS might assert that the contribution and distr ibution transactions were in effect a disguised sale of two-thirds ($50,000 distribution ? $75,000 fair market value) of the property contributed by Ben to the partnership. e. $16,667. Under disguised sale treatment, Ben will recognize gain on a sale of two-thirds of his interest in the land. He will be deemed to have received $50,000 in exchange for two-thirds of the land, with a basis of $33,333 ($50,000 basis ? 2/3). Total gain recognized, then, is $16,667. f. $66,667. The partnership will be deemed to have paid $50,000 for two-thirds of the land.The remaining one-third is deemed to be contributed to the partnership, and the partnership will take a carryover basis of $16,667 in this parcel. The partnership’s total basis is $66,667 ($50,000 + $16,667). Figure 21. 3 and Example 12 34. a. The partners’ initial bases in their partnership interests are the same amounts as their bases in the contributed property ( § 722). Rachel’s basis $360,000 Barry’s ba sis 600,000 b. The 2011 sale results in ordinary income of $170,000 to the partnership. 2011 sale: Selling price$530,000 Basis (360,000) Gain$170,000 The gain is ordinary income, since the land is held as inventory by the partnership. The land was a capital asset to Rachel, but no code provision allows treatment of the gain based on Rachel’s use rather than the partnership’s use. c.The 2012 sale results in a $100,000 capital loss and a $20,000 ordinary ( § 1231) loss. 2012 sale: Selling price$480,000 Basis (600,000) Loss ($120,000) As a sale of inventory (determined at the partnership level), the sale in 2012 of the land contributed by Barry would normally result in an ordinary ( §Ã‚  1231) loss. However,  §Ã‚  724 overrides the usual treatment. The character of the precontribution loss, instead, is determined based on the character of the property in Barry’s hands. This sale was within five years of the capital contribution date, so the loss is capital in nature to the extent of the built-in loss at the contribution date, which is: FMV at contribution$500,000 Basis (600,000) Capital loss ($100,000)The remaining $20,000 loss in 2012 is an ordinary ( § 1231) loss because the character of the post-contribution loss is based on the partnership’s ownership and use of the property as inventory. d. If the property Barry contributed was sold by the partnership in 2017, the entire $120,000 loss would be treated as an ordinary ( §Ã‚  1231) loss. A sale in 2017 would not be within five years of the contribution date, so the character of the loss would be determined solely by reference to the character of the asset to the partnership. Since the land is inventory to the partnership, the loss in 2017 would be ordinary. pp. 21-12, 21-13, and Examples 16 and 17 35. P5 Partnership, Ltd. has incurred costs for organizing ($10,000), starting the business ($60,000), transferring of property ($24,000), and securing investors ($1  million) f or the partnership. The organizational costs are treated under  § 709. Under this section, the first $5,000 of such expenses are deducted (provided the total is less than $50,000); the remainder is amortized over 180 months. The startup costs are treated under  § 195. Under this section, also, the first $5,000 of such expenses are deducted, provided the total is less than $50,000. If costs exceed $50,000, the $5,000 deduction is phased out, dollar for dollar, by the amount of costs in excess of $50,000. When total costs equal or exceed $55,000 (as in this situation), no portion of the expense is currently deductible.Instead, the full amount is amortized over 180 months. The $24,000 transfer tax is treated as a cost of acquiring the land and is added to the partnership’s basis in the land. The $1 million of brokerage commissions is treated as a syndication cost of the partnership. Under  §709, these costs cannot be deducted. pp. 21-15 to 21-17 36. The SB Limited Liabilit y Company must address the following issues in preparing its initial tax return: †¢ What year-end must the LLC use? Unless an election is made under  § 444, the LLC must use the year-end determined under the least aggregate deferral method. There is no majority member, and the principal members do not have the same year-end.Under the least aggregate deferral method, the LLC would use a July year-end since this would result in only a 5-month deferral of income to Block. Example 19 †¢ What method of accounting will the LLC use? Even though both members are Subchapter C corporations, the LLC may elect the cash method of accounting if average annual gross receipts are less than $5 million for the year. The LLC, then, could select either the cash, accrual, or a hybrid method of accounting. p. 21-17 †¢ How are the initial legal fees treated? Can the first $5,000 of organizational expenditures be immediately expensed and the balance amortized over a period of 180 months or more? Would any amounts be treated as startup expenditures under  § 195? p. 21-15 The members’ initial bases in their LLC interests must be determined. The bases will be the substituted basis of the assets contributed to the LLC ($650,000 for Block, and $550,000 for Strauss). Example 14 †¢ The LLC’s basis in the property received from the members must be determined, and any cost recovery related to contributed property calculated. The LLC takes a basis of $650,000 in the equipment and steps into Block’s shoes in determining cost recovery allowances. Since the licenses and drawings are contributed rather than sold, the LLC takes a $0 basis in these assets, with no cost recovery possible. The LLC takes a $50,000 carryover basis in the land and a $500,000 basis in the cash. p. 21-12 The LLC must determine whether any portion of either of the LLC interests is issued in exchange for services. The equipment, cash, and land are considered â€Å"property† for purposes of  § 721. The building permits and architectural designs also are considered property under  § 721, even though they are intangible assets. Therefore, none of the LLC interests is issued in exchange for services. Example 13 †¢ Treatment of expenses incurred during the initial period of operations must be considered. The legal fees are organization costs and their tax treatment was previously noted. The construction costs must be capitalized until such time as the building is placed in service. The office expense may have to be capitalized under either (1)  § 195, if it is etermined that the business is still in the startup stage, or (2)  § 263A if it is determined the costs relate to â€Å"production† of the rental property. If neither of these provisions applies, the office expense is currently deductible. pp. 21-15 and 21-16 †¢ If the land is later sold, a portion of the gain must be allocated to Strauss, since the gain was â€Å"built-inâ €  at the time the property was contributed. Note that if the equipment had been appreciated, depreciation allocations would have to take the precontribution gain into account. Allocation of precontribution deductions related to depreciable property are not covered in this text. p. 21-24 37. In 2008, 2009, and 2010, BR can use either the cash, accrual, or a hybrid method of accounting.BR has at least one Subchapter C corporation as a partner, but BR’s average annual gross receipts did not exceed $5,000,000 in either 2008 or 2009. (BR’s average annual gross receipts were $4,600,000 for 2008 and $4,800,000 for 2009. ) In 2011, BR must change to the accrual method of accounting. BR has at least one Subchapter C corporation as a partner during that year, and BR’s average annual gross receipts for the preceding y

In what ways were drama techniques and effects used?

We came across many problems with the staging of our production because we had different ideas we wanted to communicate. Firstly we wanted to create the idea of a circus by using Theatre in the round however there were more cons than pros and although this helped create an image of the circus the room was too small which would limit the audience we had. Also, it would be challenging because we would have to perform to both sides which would limit how we acted in the scene. After trying out different styles of staging we decided on having the audience end on this helped increase the size of the audience and made it simple for us the actors because we only had to perform to the front. We also decided on having an apron through the middle because it helped us get on and off and were an extra exit when needed to leave the stage but was also good to get close to the audience and interact with them more. The set of our production was simple because we had limited equipment but also we wanted to keep it simple because it meant as a group we would have to work harder to create the illusion and let the audience use their imagination. We used basic props as well because there were numerous scenes so it was difficult to take them on and off. We decided on a few scenes were props were necessary e.g. clown scenes and Punch and Judy we found that we needed props in Punch and Judy because they help the storyline and create the characters, props helped make Punch and Judy look more like a cartoon and helped make it humorous because we exaggerated the size of the props e.g. Punch had a huge cigarette. We wanted to put a modern spin on Punch and Judy while sticking to the original storyline and the props are what help the audience to familiarize with it. In general we used physical theatre techniques meaning most scene had no or very little speech. This meant we had to show messages through symbolic movement. Our body movements and facial expressions helped convey the message to the audience. For example in The Mirror Scene we had to show the difference between two characters without speaking so we used exaggerated faces and movements to express the emotion of the piece. We used lighting and sound throughout the production to convey the atmosphere and emotion of the piece. In the first scene we wanted to make the audience feel the excitement and thrill that a circus usually gives, so we used lots of different coloured flashing lights to give the idea of a circus and also disorientate the audience. The sound we chose was slightly strange sounding, we wanted to show that this wouldn't be a typical circus and give the impression something scary was going to happen. Another sound we used was a drumming sound to crate the idea of panic and chase with flashing bright lights to disorientate the audience again. For the end scenes we wanted to show a contrast between the emotions of the first half of the play were we symbolised in one scene love with soft pink lighting and classical music with the darkness of the second half. During the freaks scene we tried out different sounds however decided that we would make the noises and overlap each other, making it distorted. This meant the noise wouldn't be clear and keeping the lighting dark and too a minimal with just one single light on helped create an uneasy atmosphere and keep the audience on their toes.

The Application of Hibah and Will in Property - Free Essay Example

Sample details Pages: 6 Words: 1939 Downloads: 9 Date added: 2017/06/26 Category Law Essay Did you like this example? Chapter 3 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Application of Hibah and Will in Property 3.1 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Property in Islam The property and wealth of a person is consider as a gift from Allah SWT that shall be used in accordance to his commandments. Therefore, strict rules regarding a personà ¢Ã¢â€š ¬Ã¢â€ž ¢s property and wealth has been clearly specified by Islam. This is to ensure it to be properly manage because every single thing in this universe belongs to Allah SWT and therefore, human being are the entrusted and trusteeship of Allah.[1] This commandments has been explained in Surah Al- Hadid (57:7) which states that à ¢Ã¢â€š ¬Ã¢â‚¬Å" à ¢Ã¢â€š ¬Ã…“Believe in Allah and His Messenger and spend out of that in which He has made you successors. Don’t waste time! Our writers will create an original "The Application of Hibah and Will in Property" essay for you Create order For those who have believed among you and spent, there will be a great rewardà ¢Ã¢â€š ¬Ã‚ .[2] From the above verse, it is clear that all the property and wealth of a person belong to Allah SWT and being the administrator, human beings shall manage it accordingly. Every Muslims who have left behind their own halal property and wealth must refer to Islamic rules. The property and wealth shall concerns regarding the legal transactions, rights and obligations that arise due to it. 3.2- Will in Property Who can make a will? Following the Islamic law, any person who has the property and wealth may make a will provided that, the property is owned and possesses by him or herself. Besides, the property also must be halal property which is valuable in the eyes of Sharia.[3] As a basic rules, the portion of will may be bequest during the lifetime of a person and it is only effective after the death of the person making the will, or known as testator. As mention, only 1/3 of the property of a person may be outset for will. In a Hadith narrated by Saà ¢Ã¢â€š ¬Ã‹Å"d ibn Abi Waqqas (RA): I was stricken by an ailment that led me to the verge of death. The Prophet came to pay me a visit. I said, O Allahs Apostle! I have much property and no heir except my single daughter. Shall I give two-thirds of my property in charity? He said, No. I said, Half of it? He said, No. I said, One-third of it? He said, You may do so, though one-third is also too much, for it is better for you to leave your offspring wealthy than to leave them poor, asking others for help[4] Furthermore, when a Muslim dies, the 1/3 amount must be calculated after it has been deducted for some obligatory duties which need to be performed. Such portion may include, payment of funeral expenses, payment of his or her debts, payment for the execution his or her will and distribution of the remaining estate amongst the heirs according to Sharia or known as Faraid. In Malaysia, a body such as Majlis Agama Islam Selangor (MAIS) also offers service for making a will. A person a wish to make a will must first pay an amount of RM200 for registration and implementation of a will. The range of payment may vary starting from 2% for the first RM 25,000 property up to 0.25% for property amounts from RM 200,000 and above.[5] The general application of will on property in Malaysia is separated between a Muslim and a non-Muslim. For a non-Muslim, they are obliged under the Wills Act 1959[6] however for Muslims, the hukm for will is operated separately by different states such as under the Selangor Muslim Wills Enactment 1999 which is the first rulings of Islamic Wasiat, Negeri Sembilan Muslim Wills Enactment 2004 and the Melaka Muslim Wills Enactment 2005. The rulings from the statutes are primarily based from the Islamic legal rulings, besides the rulings from the statutes are also void if it contravenes to any of Islamic rulings.[7] In matters regarding will, both the civil and Sharia court will have jurisdictions. The Civil courts will have the jurisdiction to issue probate and gives permission to bequest the property according to Shariah law.[8] While the Shariah courts have the jurisdiction to determine the validity of will and to enforce or settle any disputes that may occur. In Selangor, under Section 5 (4) of the Administration of the Religion of Islam (State of Selangor) Enactment 2003, the Council shall have the power to act as executor of a will or an administrator of the estate of a deceased person or as trustee of any trust.[9] Therefore, in 2005, MAIS had established a unit called Wills Trusts Unit functioning to accept the applications for executing wills and testaments of all Muslims in the state. 3.2.1- Selangor Muslim Wills Enactment 1999 Under the Selangor Muslim Wills Enactment 1999, Section 3 states that will can be made either by oral with 2 witnesses, written by filling forms or by signals which may be understand.[10] This is clearly been distinguish from the non-Muslim who is governed under the Wills Act as every will must be subjected on written form.[11] In a case of Nik Salma Zaidah binti Haji Wan Zaid v Nik Hasnah binti Nik Din[12], the appellant claimed that his foster father had told her in front of both respondents that he wanted to build a house to be given to her. Accordingly, the foster father had provided funding for the construction of the house. However, the house could only be built after the death of the foster father. The issue was whether the words uttered by the foster father can be regarded as a will. The Kota Bharu Kelantan Syaria Court of Appeal ruled that such words can be accepted as a will by way of kinayah (indirect) and the appellant is considered as the recipient of the said will when she managed the construction of the house and later occupied it. While, under Section 6, it specify that a person making a will must be above the 18 years of age, sound mind, wilfully without force and has authority over the said property.[13] This is to ensure that the property bequest is a valid property and owns by a valid owner. Section 7 further describes the beneficiaries to be known and eligible to own such property to ensure that the bequest property will be subjected to a valid persons.[14] Section 12 explains on how a Will may be invalid if the testator to be an unsound mind and dies in that state or when the beneficiary dies before the testator or the property perish before the death of the testator or the testator revoke his will.[15] As a result of such, Section 17(6) provides that if a beneficiary die before he manages to accept or reject a will, the heirs should decide whether they intend to accept or reject it.[16] In a hadith the Prophet Muhammad SAW o nce said, One who kills a man cannot inherit from him.[17] Based on this hadith, Section 14 clarify a parson who cause a murder of a person, shall not inherit his or her property.[18] The Malaysian Fatwa Council, in October 2008 had decided the à ¢Ã¢â€š ¬Ã‹Å"Wasiat Wajibahà ¢Ã¢â€š ¬Ã¢â€ž ¢ is recommended among Muslims as it is beneficial to heirs who are not eligible to receive any portion of property according to the à ¢Ã¢â€š ¬Ã‹Å"Faraidà ¢Ã¢â€š ¬Ã¢â€ž ¢. The Malaysian Fatwa Council refers their argument by referring to Ibn Hazm al-Zahiri which states Will in Islam is à ¢Ã¢â€š ¬Ã‹Å"Wajibà ¢Ã¢â€š ¬Ã¢â€ž ¢ towards family which is not eligible for Faraid.[19] This situation refers to grandchildren whose rights in receiving the property from grandparents was prevented by Faraid for their mothers or father. Under the Selangor Muslim Wills Enactment 1999, Section 27 states the same situation where a grandparents may bequest a portion of his or her property to grandchildren.[20] 3.3- Hibah in Property Hibah of property can be made by someone and it will be considered as a private contract which is created during the lifetime of both the donor and the donee. It can be made by donor to any person whom he or she intends to distribute the property. According to Syafie, a fair way of distributing oneà ¢Ã¢â€š ¬Ã¢â€ž ¢s property to the children while one is still alive is to give away equal amount without differentiating between boys and girls. At the moment in Malaysia, there is no specific law which governs the administration of hibah. [21] Therefore, in this discussion, cross reference will be made through courtà ¢Ã¢â€š ¬Ã¢â€ž ¢s decisions and Islamic legal rulings. Many cases of Hibah in Syariah Court are often regarding a wife claimed that she was promised by the husband that the matrimonial home was a gift to her and the deed of ownership was in her name but after their divorce, the husband denied that it was a Hibah and claimed that as he paid for the property, he has so me right to it. As Hibah may be regarded as a contract law in Malaysia, therefore on the Meeting of the Islamic Law Consultative Committee of the Federal Territory in 2000, it was decided that attachment of conditions is allowed if Hibah were to take place. Besides, the Syaria Advisory Council (SAC) of the Securities Commission in 2003 agreed to adopt the principles of hibah ruqba as the syaria basis in the implementation of the hibah declaration form for transactions. Hibah Qubra refers to conditional hibah where a hibah is to be given based on some contitions.[22] In the case of Eshah Bt Abdul Rahman v Azuhar B Ismail, the Court stated that Hibah given by parents can be revoked as long as the gift hasnà ¢Ã¢â€š ¬Ã¢â€ž ¢t been developed or given to another or that there were no consideration for the gift. [23] This shows that hibah carries a similar effect if any of its contarct is to be revoke. In Roberts v Ummi Kalsum the court ruled there are three essentials of a va lid hibah under Muslim law namely, the declaration of gift by the donor, express or implied acceptance of the gift by the donee and the delivery of possession of the gift by the donor to the donee. Absence of any those elements will make hibah invalid. There elements was essential is to ease the court to determine whether the said property that were given is a hibah. [24] In Harun bin Muda and Others vs Mandak binti Mamat, the claims made by the plaintiff was to confirm that the land was a hibah from the deceased. The High Court ruled that that hibah had taken place even though qabul happened through actions whereby after ijab, the property had been developed, or worked on, or benefited by the defendant.[25] [1] Abu Al Jauzaaà ¢Ã¢â€š ¬Ã¢â€ž ¢. (2012, September 26). Wealth and Properties: Islamic Perspective. Retrieved December 19, 2014, from https://syaria.com/wealth-and-properties-islamic-perspective/ [2] Surah Al Hadid (57:7) [3] Will Template Guidelines. (2011). In Preparing an Islamic Will (3rd ed., pp. 10-13). Bolton: LST Ethical. [4] Sahih al-Bukhari, Sahih Muslim, Muwatta, Tirmidhi, Abu Dawud and Ibn Majah. [5] Pengurusan Wasiat. (n.d.). Retrieved December 19, 2014, from https://www.mais.net.my/index.php?option=com_contentview=categoryid=27layout=blogItemid=83 [6] Act 346 [7] Selangor Muslim Wills Enactment 1999, Section 28 [8] Probate and Administration Act 1959 [9] Administration of the Religion of Islam (State of Selangor ) Enactment 2003, Section 5 [10] Selangor Muslim Wills Enactment 1999, Section 2 [11] Wills Act 1958, Section 5 [12] Nik Salma Zaidah binti Haji Wan Zaid v Nik Hasnah binti Nik Din [2002] XV JH 143 [13] Selangor Muslim Wills Enactment 1999, Section 6 [14] Selangor Muslim Wills Enactment 1999, Section 7 [15] Selangor Muslim Wills Enactment 1999, Section 12 [16] Selangor Muslim Wills Enactment 1999, Section 17 [17] Tirmidhi and Ibn Majah [18] Selangor Muslim Wills Enactment 1999, Section 14 [19] Muzakarah (khas) Jawatankuasa Fatwa Kebangsaan held on 24th October 2008, https://www.e-fatwa.gov.my/fatwa-kebangsaan/hukum-pelaksanaan-wasiat-wajibah [20] Selangor Muslim Wills Enactment 1999, Section 27 [21] Zulkifli Hasan. (n.d.). HIbah and Application. In An Introduction to Islamic Law of Property in Malaysia. [22] Ibid. [23] Eshah Bt Abdul Rahman v Azuhar B Ismail (1997) XI (II) Jurnal Hukum 219 [24] Roberts v Ummi Kalsum (1966) 1 MLJ 163 [25] Harun bin Muda and Others vs Mandak binti Mamat and Others [1999] XIII (I) JH 63