On July 1, 2014, Bertram acquired a 25 percent interest in Sycamore Company, a partnership, by contributing property with an adjusted basis of $7,000 and a fair market value of $12,000. The property was subject to a mortgage of $8,000, which was assumed by Sycamore Company. What is Bertram's basis in his partnership interest in Sycamore Company immediately after the partnership contribution?

Question

Quizplus · Accepted Answer

Bertram's basis is calculated as his adjusted basis in the contributed property ($7,000) minus the mortgage assumed by the partnership ($8,000) plus his share of the partnership's liabilities (25% of $8,000 = $2,000). So, $7,000 - $8,000 + $2,000 = $1,000.

On July 1, 2014, Bertram Acquired a 25 Percent Interest