Question

Leo contributed $28,000 in cash for a 25% interest as a limited partner in a partnership. He also contributed property with an adjusted basis of $30,000, with a recourse liability of $10,000. What is Leo's basis in the partnership? $58,000 $50,500 $48,000 $28,000

Answer 1

Leo's basis in the partnership is calculated by adding his cash contribution to the adjusted basis of the contributed property, then subtracting the associated liability. His total basis is $48,000.

Step-by-step explanation:

Leo's basis in the partnership can be calculated by summing his cash contribution and the adjusted basis of the property he contributed, then subtracting the recourse liability associated with the property.

Leo contributed $28,000 in cash and property with an adjusted basis of $30,000.

However, the property had a recourse liability of $10,000 that must be considered.

The calculation of Leo's basis would be:

$28,000 (cash) + $30,000 (adjusted basis of the property) - $10,000 (liability)

= $48,000 (total basis in the partnership).

Therefore, Leo's basis in the partnership is $48,000.