Elijah contributes land (basis of $80,000;fair market value of $400,000)for a 20% interest in a partnership.The land is subject to a mortgage of $50,000 which the partnership assumes.As a result of the transfer,Elijah:

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Elijah's basis is $40,000 [$80,000 (basis in the land)- $40,000 (80% × $50,000-the portion of the mortgage assumed by the other partners).Elijah recognizes no gain on the transfer (choice a. ).

Elijah Contributes Land (Basis of $80,000;fair Market Value of $400,000)for