26

Gerald received a one-third capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with an FMV of $20,000. His adjusted basis in the building was $10,000. In addition, the building was encumbered with a $6,000 nonrecourse mortgage that XYZLP assumed at the time the property was contributed, What is Gerald's outside basis immediately after his contribution? Multiple Choice $14,000 $6,000 $4,000 $16,000 Erica and Brett decide to form their new motorcycle business as an LLC. Each will receive an equal profits (loss) interest by contributing cash, property, or both. In addition to the members' contributions, their LLC will obtain a $46,000 nonrecourse loan from First Bank at the time it is formed. Brett contributes cash of $4,200 and a building he bought as a storefront for the mptorcycles. The building has an FMV of $41,000 and an adjusted basis of $26,000 and is secured by a $31,000 nonrecourse mortgage that the LLC will assume. What is Brett's outside tax basis in his LLC interest? Multiple Choice $38.500 $35,200 $40.200 $33,500