On January 5, 2014, Mike acquires a 50% interest in Precision Tools Partnership by contributing property with an adjusted basis of $20,000 and a fair market value of $24,000, subject to a mortgage of $16,000. What is Mike's basis in Precision Tools Partnership as of January 5, 2014?

Question

Quizplus · Accepted Answer

Mike's basis is calculated as his adjusted basis in the contributed property ($20,000) minus the portion of the mortgage assumed by the other partner (50% of $16,000 = $8,000), resulting in a basis of $12,000.

On January 5, 2014, Mike Acquires a 50% Interest in Precision