Kevin,Chuck,and Greg contributed assets to form the equal KCG Partnership.Kevin contributed cash of $50,000 and land with a basis of $80,000 (fair market value of $50,000).Chuck contributed cash of $30,000 and land with a basis of $40,000 (fair market value of $70,000).Greg contributed cash of $60,000 and a fully depreciated property ($0 basis)valued at $40,000.Which of the following tax treatments is not correct?
A)Kevin's basis in his partnership interest is $130,000.
B)Chuck's basis in his partnership interest is $100,000.
C)Greg's basis in his partnership interest is $60,000.
D)KCG has a basis of $80,000,$40,000,and $0 in the land and property (excluding cash)contributed by Kevin,Chuck,and Greg,respectively.
E)All of these statement are correct.

Question

Quizplus · Accepted Answer

Chuck's basis in his partnership interest should be $110,000 (($40,000 FMV of land + $30,000 cash contributed) - ($40,000 basis of land)). Therefore, option B is not correct. 
Option A is correct, as Kevin's basis in his partnership interest is $130,000 (($50,000 cash contributed) + ($50,000 FMV of land) + ($80,000 basis of land)). 
Option C is correct, as Greg's basis in his partnership interest is $100,000 (($60,000 cash contributed) + ($40,000 FMV of property)). 
Option D is correct, as the partnership's basis is equal to the basis of the assets contributed.

Kevin,Chuck,and Greg Contributed Assets to Form the Equal KCG Partnership