Peter contributes property to a partnership in exchange for a 30% interest in the partnership. The contributed property consists of real estate he owns worth $500,000. Peter has an adjusted basis in the real estate of $200,000 and the real estate is subject to a mortgage of $300,000. What is Peters basis in his partnership interest, and how much gain or loss does he recognize?

a. negative basis of $10,000, and no gain is recognized.b. 0 basis and gain of $10,000 is recognized.c. 200,000 basis and no gain is recognized.d. 0 basis and a loss of $10,000 is recognized.

My answer is (c) 200,000 basis and no gain is recognized.(500,000-300,000)=200,000-200,000 adjusted basis is0 gain. Is this correct?