Bernard and Leon formed a general partnership on January 1 with cash contributions of $600,000 and $200,000, respectively. The partners agree to share profits and losses in the ratio of their initial capital contributions. The partnership immediately borrowed $800,000. What is Bernard's tax basis in his partnership interest?

Question

Quizplus · Accepted Answer

Bernard's tax basis in his partnership interest is equal to his cash contribution ($600,000) plus his share of the partnership's liabilities ($800,000 x 60% = $480,000), which totals $1,200,000.

Bernard and Leon Formed a General Partnership on January 1