Question

An equal partnership 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 is the partnership's basis in the building contributed by rita?

a. $55,000
b. $60,000
c. $90,000
d. $150,000
e. none of the above

Answer 1

Given:
Rita contribution:
cash of $10,000
building with a fair market value of $150,000, adjusted basis of $55,000 and subject to a liability of $60,000

Gerry contribution:
cash of $100,000

The partnership's basis in the building contributed by Rita is a. $55,000.

The amount corresponds to the adjusted basis. It is already the adjusted value of the building after the fair market value and the corresponding liabilities have been considered in the computation of the adjusted building value.