Mrs. Brinkley transferred business property (FMV $340,200; adjusted tax basis $111,700) to M&W Partnership in exchange for a 36% interest in M&W Partnership. Compute M&W's recognized gain on its exchange of an equity interest for property and determine M&W's tax basis in the property received from Mrs. Brinkley.

Question

Quizplus · Accepted Answer

Under IRC Section 721, no gain or loss is recognized when property is transferred to a partnership in exchange for an interest in the partnership. The partnership's basis in the property is the same as the transferor's adjusted basis, which is $111,700.

Mrs Brinkley Transferred Business Property (FMV $340,200; Adjusted Tax Basis