Jenny contributes land (adjusted basis of $300,000; fair market value of $280,000) and cash of $40,000 to the newly formed Green Partnership.Green will have a basis of $280,000 in the land.

Question

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The basis of the land contributed by Jenny will be its fair market value, which is $280,000, since it is less than her adjusted basis. The partnership will have a total basis of $320,000 ($280,000 for the land and $40,000 for the cash).

Jenny Contributes Land (Adjusted Basis of $300,000; Fair Market Value