A partnership will take a carryover basis in an asset it acquires when:
A)The partnership acquires the asset through a § 1031 like-kind exchange.
B)A partner owning 25% of partnership capital and profits sells the asset to the partnership.
C)The partnership leases the asset from a partner on a one-year lease.
D)The partnership acquires the asset from a partner as a contribution to partnership capital under § 721(a).

Question

Quizplus · Accepted Answer

Under § 721(a), a partner's contribution of property to a partnership in exchange for an interest in the partnership is not a taxable event. The partnership will take a carryover basis in the contributed property, meaning that the partnership's basis in the asset will be the same as the contributing partner's basis.

A Partnership Will Take a Carryover Basis in an Asset