Question

Gerald received a one-third capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with an FMV of $31,000. His adjusted basis in the building was $15,500. In addition, the building was encumbered with a $9,300 nonrecourse mortgage that XYZ LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution

Answer 1

The appropriate answer is "$9,300".

Step-by-step explanation:

The given values are:

FMV,

= $31,000

Adjusted basis,

= $15,500

Encumbered mortgage,

= $9,300

Now,

The Gerald's outside basis will be:

=
`Adjusted \ basis-Encumbered \ mortgage+Share \ of \ mortgage`

On substituting the given values, we get

=
`15,500 - 9,300+((9,300)/(3))`

=
`15,500 - 9,300 + 3,100`

=
`18,600-9,300`

=
`9,300` ($)