On July 1,Alexandra contributes business equipment (which she had purchased two years ago)having a $45,000 FMV and a $40,000 adjusted basis to the AX Partnership in exchange for a 25% interest in the capital and profits.The basis of Alexandra's partnership interest is
A)$5,000.
B)$40,000.
C)$45,000.
D)None of the above.

Question

Quizplus · Accepted Answer

The basis of Alexandra's partnership interest is her adjusted basis in the contributed property, which is $40,000.

On July 1,Alexandra Contributes Business Equipment (Which She Had Purchased