Bernard and Leon formed a 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 includes his initial contribution of $600,000 plus his share of the partnership's liabilities, which is $800,000 * (600,000/800,000) = $600,000. Therefore, his total tax basis is $600,000 + $600,000 = $1,200,000.

Bernard and Leon Formed a Partnership on January 1 with Cash