An equal partnership is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building

Question:

An equal is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building with a fair market value of $150,000, adjusted basis of $55,000, and subject to a liability of $60,000. Gerry contributes cash of $100,000. What amount of gain must Rita recognize as a result of this transaction?
A. $5,000
B. $95,000
C. $0
D. $35,000
E. None of these choices are correct.
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...