Taylor and Tanner formed a partnership. Taylor contributed $50,000 in cash. Tanner contributed land and buildings he purchased for $50,000 some time ago. His tax basis in the property is now $30,000, although it was recently appraised for $70,000. There is a $15,000 mortgage attached to the building that the partnership will assume. What is the amount of Tanner's capital account after his contribution?

Question

Quizplus · Accepted Answer

The building will be recorded at its fair value of $70,000. The mortgage will be assumed by the partnership, so Tanner's capital account will have a balance of $55,000 ($70,000 - 15,000).

Taylor and Tanner Formed a Partnership