Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For a 30% interest in partnership capital, profits, and losses, Carol contributes a machine with a basis of $40,000 and an FMV of $80,000. The

For a 30% interest in partnership capital, profits, and losses, Carol contributes a machine with a basis of $40,000 and an FMV of $80,000. The partnership assumes a $70,000 recourse liability on the machine. At the time of the contribution, the partnership had recourse liabilities of $10,000. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. Following the contribution, Carol has:_______.

a) a capital loss due to the contribution of $6,000 and a zero basis in the partnership interest. b) a capital gain due to the contribution of $6,000 and a zero basis in the partnership interest. c) a $34,000 basis in the partnership interest and no gain or loss. d) a $43,000 basis in the partnership interest and no gain or loss.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting A Practical Approach Chapters 1-25

Authors: Jeffrey Slater

12th Edition

013277206X, 978-0132772068

More Books

Students also viewed these Accounting questions

Question

Find the product. [(3q + 52 - p][(3q + 5) + p]

Answered: 1 week ago

Question

Wha t is proc rastination? (p. 3 02)

Answered: 1 week ago