Abby contributed property with a $80,000 basis and fair market value of $120,000 to the ABC Partnership in exchange for a 50% interest in partnership capital and profits.During the first year of partnership operations, ABC had net taxable income of $60,000 and tax-exempt income of $56,000.The partnership distributed $24,000 cash to Abby.Her share of partnership recourse liabilities on the last day of the partnership year was $32,000.Abby's adjusted basis (outside basis) for her partnership interest at year-end is:
A)$110,000.
B)$146,000.
C)$144,000.
D)$196,000.
E)Some other amount.

Question

Quizplus · Accepted Answer

Abby's initial basis is $80,000 (her contributed property basis). Add her share of taxable income ($30,000) and tax-exempt income ($28,000), and her share of liabilities ($32,000). Subtract the cash distribution ($24,000). The calculation is $80,000 + $30,000 + $28,000 + $32,000 - $24,000 = $146,000.

Abby Contributed Property with a $80,000 Basis and Fair Market