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An individual received a 70% capital interest in a general partnership by contributing the following: Investment...

An individual received a 70% capital interest in a general partnership by contributing the following: Investment land purchased 10 years age for $40,000 and valued at $60,000. A personal (nonbusiness) truck purchased nine months ago for $12,000 and valued at $10,000. The partnership obtains a $50,000 nonrecourse mortgage loan on the land. How much is this general partner basis in the partnership after the contribution and loan? A $85,000 B. $87,000 C. $100,000 D. $102,000

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Answer #1

Only the valued of the land is to be considered for calculation of partner capital basis in this case as the personal truck was non-business in nature. Thus, the general partner basis in the partnership after the contribution and loan will be calculated as following:

Particulars

Amount ($)

Value of land

     60,000.00

Add: capital interest (60000 x 70%)

     42,000.00

Partner basis

   102,000.00

Hence, the general partner basis in the partnership after the contribution and loan is $102,000. Thus, the correct answer is option D, i.e. $102,000.

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