Justin and Kevin formed the equal JK Partnership during the current year, with Justin contributing $60,000 in cash and Kevin contributing land (basis of $40,000, fair market value of $30,000) and equipment (basis of $0, fair market value of $30,000).Kevin recognizes a $20,000 gain on the contribution and his basis in his partnership interest is $60,000.

Question

Quizplus · Accepted Answer

Kevin's basis in his partnership interest would be $70,000 ($40,000 for the land + $30,000 for the equipment) and not $60,000 as stated in the question. Additionally, he would not recognize a gain on the contribution since the fair market value of his contribution is less than his adjusted basis.

Justin and Kevin Formed the Equal JK Partnership During the Current