Stella acquired a 25% interest in the STUV Partnership by contributing land having an adjusted basis of $32,000 and a fair market value of $100,000. The land was subject to a $48,000 mortgage, which was assumed by STUV. No other liabilities existed at the time of contribution. What is Stella's basis in her partnership interest?

Question

Quizplus · Accepted Answer

Stella's basis in her partnership interest is calculated as her adjusted basis in the land ($32,000) minus the mortgage assumed by the partnership ($48,000), resulting in a negative $16,000. However, basis cannot be negative, so it is reduced to $0.

Stella Acquired a 25% Interest in the STUV Partnership by Contributing