What is Kelly’s basis for her partnership interest in each of the following independent situations? The partners share the economic risk of loss from recourse liabilities according to their partnership interests.
a. Kelly receives her 20% partnership interest for a contribution of property having a $14,000 basis and a $17,000 FMV. The partnership assumes her $10,000 recourse liability but has no other debts.
b. Kelly receives her 20% partnership interest as a gift from a friend. The friend’s basis (without considering partnership liabilities) is $34,000. The FMV of the interest at the time of the gift is $36,000. The partnership has liabilities of $100,000 when Kelly receives her interest. No gift tax was paid with respect to the transfer.
c. Kelly inherits her 20% interest from her mother. Her mother’s basis was $140,000. The FMV of the interest is $120,000 on the date of death and $160,000 on the alternate valuation date. The executor chooses the date of death for valuing the estate. The partnership has no liabilities.