George and Martha formed a partnership by each contributing $5,000 cash. The partnership then borrowed another $60,000 to finance its operations. If George and Martha are both general partners, compute each partner's basis in his/her partnership interest.

Question

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Each partner's basis includes their initial contribution plus their share of partnership liabilities. George and Martha each contributed $5,000 and share the $60,000 liability equally as general partners, adding $30,000 each to their basis. Thus, each partner's basis is $5,000 + $30,000 = $35,000.

George and Martha Formed a Partnership by Each Contributing $5,000