Blaine contributes property valued at $50,000 (basis of $40,000) in exchange for a 25% interest in the BIKE Partnership. If the property is later sold for $70,000, gain of $15,000 will be allocated to Blaine.

Question

Quizplus · Accepted Answer

The gain is allocated based on the partner's interest in the partnership. Blaine has a 25% interest, so he is allocated 25% of the $15,000 gain, which is $3,750.

Blaine Contributes Property Valued at $50,000 (Basis of $40,000) in Exchange