On July 1 of the current year, Bertram acquired a 25 percent interest in Sycamore Company, a partnership, by contributing property with an adjusted basis of $7,000 and a fair market value of $12,000. The property was subject to a mortgage of $8,000, which was assumed by Sycamore Company. What is Bertram's basis in his partnership interest in Sycamore Company immediately after the partnership contribution?

Question

Quizplus · Accepted Answer

Bertram's basis in his partnership interest is calculated by starting with his adjusted basis in the contributed property ($7,000), then subtracting his share of the debt assumed by the partnership (25% of $8,000 = $2,000), resulting in a basis of $5,000. However, this calculation was not directly provided in the options, indicating a mistake in the interpretation of the question or in the provided options. The correct approach to calculate the basis involves considering the relief of debt as part of the transaction, but without the exact calculation provided in the options, the closest or intended correct answer is not clearly identifiable based on the standard method of calculation. Therefore, the response assumes a potential misunderstanding or misinterpretation in the application of tax principles regarding the contribution of property to a partnership and the assumption of debt.

On July 1 of the Current Year, Bertram Acquired a 25