Felicia contributes property with a FMV of $48,000 (adjusted basis $36,000)for a one-third interest in the partnership.The property is subject to a $24,000 mortgage.Betty (a one-third partner after Felicia's contribution)has an increase in her basis in the partnership of
A)$0.
B)$4,000.
C)$8,000.
D)$12,000.

Question

Quizplus · Accepted Answer

Felicia's basis in the partnership is $36,000 (her adjusted basis in the property). Her share of the mortgage is $8,000 (one-third of $24,000). Therefore, Betty's basis in the partnership increases by $8,000.

Felicia Contributes Property with a FMV of $48,000 (Adjusted Basis