For a 30% interest in partnership capital, profits, and losses, Carol contributes a machine with a basis
Question:
For a 30% interest in partnership capital, profits, and losses, Carol contributes a machine with a basis of $40,000 and an FMV of $80,000. The partnership assumes a $70,000 recourse liability on the machine. At the time of the contribution, the partnership had recourse liabilities of $10,000. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. Following the contribution, Carol has
a. capital loss of $6,000 and a zero basis in the partnership interest.
b. capital gain of $6,000 and a zero basis in the partnership interest.
c. $34,000 basis in the partnership interest and no gain or loss.
d. $43,000 basis in the partnership interest and no gain or loss.
Federal Taxation 2021 Corporations, Partnerships, Estates & Trusts
ISBN: 9780135919460
34th Edition
Authors: Timothy J. Rupert, Kenneth E. Anderson, David S. Hulse