Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $27,000 of cash and land with an FMV of $72,000. Her basis in the land is $37,000. Andrew contributes equipment with an FMV of $29,000 and a building with an FMV of $50,000. His basis in the equipment is $25,000, and his basis in the building is $37,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew?
A)$0
B)$4,000
C)$48,000
D)$52,000

Question

Quizplus · Accepted Answer

General partnerships do not recognize gain on the contribution of property in exchange for partnership interests under IRC Section 721. The partnership takes a carryover basis in the contributed assets.

Sue and Andrew Form SA General Partnership