Shane made a contribution of property to the newly formed QRST Partnership. The property had a $80,000 adjusted basis to Shane and a $150,000 fair market value on the contribution date. The property was also encumbered by a $90,000 nonrecourse debt, which was transferred to the partnership on that date. Another partner, Rachel, shares 20% of the partnership income, gain, loss, deduction, and credit. Under IRS regulations, Rachel's share of the nonrecourse debt for basis purposes is:
A) $16,000.
B) $18,000.
C) $45,000.
D) $80,000.
E) $90,000.

Question

Quizplus · Accepted Answer

Rachel's share of the nonrecourse debt is 20% of the $90,000 debt, which is $18,000.

Shane Made a Contribution of Property to the Newly Formed