Gerald received a one-third capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with an FMV of $17,000. His adjusted basis in the building was $8,500. In addition, the building was encumbered with a $5,100 nonrecourse mortgage that XYZ LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution?
A) $3,400
B) $5,100
C) $11,900
D) $13,600

Question

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The Answer of Gerald received a one-third capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with an FMV of $17,000. His adjusted basis in the building was $8,500. In addition, the building was encumbered with a $5,100 nonrecourse mortgage that XYZ LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution?
A) $3,400
B) $5,100
C) $11,900
D) $13,600

Gerald Received a One-Third Capital and Profit (Loss) Interest in XYZ