Daniel acquires a 30percent interest in the PPZ Partnership from Paolo, an existing partner, for $39,000 of cash. The PPZ Partnership has borrowed $10,000 of recourse liabilities as of the date Daniel bought the interest. What is Daniel's basis in his partnership interest?
A)$39,000.
B)$42,000.
C)$46,000.
D)$49,000.

Question

Quizplus · Accepted Answer

Daniel's basis in his partnership interest is calculated as follows:

Purchase price: $39,000
Plus share of recourse liabilities: $3,000 (30% of $10,000)
Total basis in partnership interest: $42,000

Daniel Acquires a 30percent Interest in the PPZ Partnership from Paolo