Julie and Kate form an equal partnership during the current year.Julie contributes cash of $160,000,and Kate contributes property (adjusted basis of $90,000,fair market value of $260,000) subject to a nonrecourse liability of $100,000.As a result of these transactions,Kate has a basis in her partnership interest of $90,000.

Question

Quizplus · Accepted Answer

Kate's basis in her partnership interest is calculated as her adjusted basis in the property contributed ($90,000) plus her share of the partnership's liabilities ($50,000, which is half of the $100,000 nonrecourse liability), resulting in a basis of $140,000, not $90,000.

Julie and Kate Form an Equal Partnership During the Current