Hunter contributes property having a $75,000 FMV and a $65,000 adjusted basis which is subject to a $36,000 mortgage in exchange for a one-fourth interest in the ABC Partnership.The partnership owes no other debts,but does assume this mortgage.Profits and losses are shared equally and each partner has a one-fourth interest in partnership capital.Hunter's basis in the partnership is
A)$38,000.
B)$48,000.
C)$74,000.
D)$84,000.

Question

Quizplus · Accepted Answer

Hunter's basis in the partnership is equal to his adjusted basis in the property contributed, increased by the amount of any liabilities assumed by the partnership, and decreased by any cash received. In this case, Hunter's adjusted basis in the property is $65,000, the partnership assumes a $36,000 mortgage, and Hunter receives no cash. Therefore, Hunter's basis in the partnership is $65,000 + $36,000 = $101,000. Since Hunter has a one-fourth interest in the partnership, his basis in the partnership is $101,000 * 1/4 = $25,250.

Hunter Contributes Property Having a $75,000 FMV and a $65,000