Daniel acquires a 30percent interest in the PPZ Partnership from Paolo, an existing partner, for $49,000 of cash. The PPZ Partnership has borrowed $20,000 of recourse liabilities as of the date Daniel bought the interest. What is Daniel's basis in his partnership interest?

Question

Quizplus · Accepted Answer

Daniel's basis in his partnership interest is calculated by adding the cash he contributed ($49,000) to his share of the partnership's recourse liabilities. Since he acquired a 30% interest, his share of the $20,000 recourse liabilities is $6,000 (30% of $20,000). Therefore, his total basis is $49,000 + $6,000 = $55,000.

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