George pays $10,000 for a 20% interest in a general partnership, which has recourse liabilities of $20,000. The partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. George's basis in his partnership interest is

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George's basis in the partnership interest includes his initial investment plus his share of the partnership's recourse liabilities. He invested $10,000 and his share of the $20,000 recourse liabilities is 20%, which is $4,000. Therefore, his basis is $10,000 + $4,000 = $14,000.

George Pays $10,000 for a 20% Interest in a General