Terry transfers land (adjusted basis of $80,000,fair market value of $120,000)to the Olive Partnership for a 49% ownership interest.His basis for the ownership interest is $120,000 and Olive's basis for the land is $120,000 because Terry does not control the partnership .

Question

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The $40,000 ($120,000 - $80,000)of realized gain is not recognized (i.e.,is postponed).The partner and the partnership's basis are a carryover basis of $80,000.

Terry Transfers Land (Adjusted Basis of $80,000,fair Market Value of $120,000)to