Question

Joseph contributed $25,750 in cash and equipment with a tax basis of $14,800 and a fair market value of $19,500 to Berry Hill Partnership in exchange for a partnership interest.a. What is Joseph’s tax basis in his partnership interest?b. What is Berry Hill’s basis in the equipment?

Answer 1

a. Joseph’s tax basis in his partnership interest=$40,550

b. Joseph contributed equipment with a tax basis of $14,800, therefore, Berry Hill’s basis in the equipment is $14,800

Step-by-step explanation:

a. In order to calculate Joseph’s tax basis in his partnership interest we would have to make the following calculation:

Joseph’s tax basis in his partnership interest=amount contributed in cash+tax basis equipment

According to given data:

amount contributed in cash=$25,750

equipment tax basis =$14,800

Therefore, Joseph’s tax basis in his partnership interest=$25,750+$14,800

Joseph’s tax basis in his partnership interest=$40,550

Joseph's tax basis in his partnership interest is $40,550

b. According to the given data Joseph contributed equipment with a tax basis of $14,800, therefore, Berry Hill’s basis in the equipment is $14,800