A partnership has a $7,000 basis for proprietorship land it has just received in exchange for a 20 percent capital interest.The land had a $7,000 market value and $8,200 basis to the proprietorship.

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In a partnership, the basis of property contributed by a partner is generally the partner's adjusted basis in the property at the time of the contribution, not the market value. Therefore, the partnership's basis in the land would be the $8,200 basis it had to the proprietorship, not the $7,000 market value.

A Partnership Has a $7,000 Basis for Proprietorship Land It