Alice contributes equipment (fair market value of $50,000; adjusted basis of $15,000), subject to a $10,000 liability, to form Orange Partnership, a general partnership. Mary contributes $40,000 cash. Alice and Mary share equally in partnership profits and losses. What is Alice's and Mary's basis for their partnership interests?
A) $10,000 to Alice, $45,000 to Mary.
B) $25,000 to Alice, $25,000 to Mary.
C) $15,000 to Alice, $40,000 to Mary.
D) $5,000 to Alice, $40,000 to Mary.
E) $20,000 to Alice, $45,000 to Mary.

Question

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The Answer of Alice contributes equipment (fair market value of $50,000; adjusted basis of $15,000), subject to a $10,000 liability, to form Orange Partnership, a general partnership. Mary contributes $40,000 cash. Alice and Mary share equally in partnership profits and losses. What is Alice's and Mary's basis for their partnership interests?
A) $10,000 to Alice, $45,000 to Mary.
B) $25,000 to Alice, $25,000 to Mary.
C) $15,000 to Alice, $40,000 to Mary.
D) $5,000 to Alice, $40,000 to Mary.
E) $20,000 to Alice, $45,000 to Mary.

Alice Contributes Equipment (Fair Market Value of $50,000; Adjusted Basis