In deciding whether property owned by a partner before formation of the partnership and used in the business is a capital contribution that belongs to the firm,a court will consider which of the following?
A) Whether the property was improved with partnership funds
B) Whether the property was carried on the books of the partnership as an asset
C) Admissions or declarations of the partners
D) All of these would be considered.

Question

Quizplus · Accepted Answer

All of these factors would be considered by a court in deciding whether property owned by a partner before formation of the partnership and used in the business is a capital contribution that belongs to the firm. The use of partnership funds to improve the property would suggest that the property was an asset belonging to the partnership, while carrying the property on the partnership books as an asset would confirm this. Admissions or declarations of the partners may also provide evidence of whether the property was intended to be a capital contribution or not.

In Deciding Whether Property Owned by a Partner Before Formation