Q1.- In exchange for a 40% interest in Basic Box Partnership, John contributed equipment that had an adjusted basis of $40,000. The property had a $25,000 mortgage. The partnership assumed payment of the mortgage. What is the basis of John's interest in the partnership?

A.- $15,000

B.- $16,000

C.- $25,000

D.- $40,000

Q2.- Which of the following increases a partner's at-risk amount?

A.- A borrowed amount, secured by property used in the activity, contributed to the partnership by a partner.

B.- Cash contributed to the partnership by the partner.

C.- Cash distributed to the partner by the partnership.

D.- A net loss for the activity.

Q3.- Which of the following items decreases a partner's at-risk basis?

A.- A borrowed amount, secured by property used outside the activity, contributed to the partnership by a partner.

B.- Cash contributed to the partnership by the partner.

C.- Cash distributed to the partner by the partnership.

D.- The partner's distributed share of net gains from the partnership.