In the current year, Stephanie formed an equal partnership with Jane.Stephanie contributed land with an adjusted basis of $250,000 and a fair market value of $350,000.Stephanie also contributed $100,000 cash to the partnership.Jane contributed land with an adjusted basis of $150,000 and a fair market value of $200,000.The land contributed by Stephanie was encumbered by a $250,000 nonrecourse debt.Assume the partners share debt equally.Immediately after the formation, the basis of Stephanie's partnership interest is:
A)$0.
B)$225,000.
C)$300,000.
D)$325,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Stephanie's basis in her partnership interest is equal to the adjusted basis of the property she contributed, decreased by the amount of any liabilities assumed by the partnership that are associated with the contributed property, plus the amount of cash she contributed. In this case, Stephanie contributed land with an adjusted basis of $250,000 and a fair market value of $350,000. The land was encumbered by a $250,000 nonrecourse debt, which is assumed by the partnership. Therefore, Stephanie's basis in her partnership interest is $250,000 - $250,000 + $100,000 = $225,000.

In the Current Year, Stephanie Formed an Equal Partnership with Jane.Stephanie