Question

Fred contributes cash of $350,000 to Strumble Partnership for his 50% interest in the partnership. For...

Fred contributes cash of $350,000 to Strumble Partnership for his 50% interest in the partnership. For his 50% interest, Gary contributes a building with a fair market value of $550,000 and a basis of $250,000. The building is subject to a mortgage of $200,000. Net income for Strumble for 2019 is $100,000, Strumble borrows an additional $50,000 during 2019 and makes a distribution to each partner of $20,000. Assuming that the partners share profits and losses equally what is Gary's basis in his partnership interest at the end of 2019?

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Answer #1

Answer:

● Gary's Basis in the partnership interest is $155,000

Explanation:

Particulars Amount ($)

Adjusted Basis Of Land = 250000 Mortage*Share In Percentage

($200000*50%) = (100000)

Additional Borrowing*Share In Percentage =($50000*50%)= (25000)

#Difference*Share In Percentage = ($100000-$40000)*50% = 30000

● Basis = 250000 - 100000 -25000 +30000  

= $ 155000   

Difference:

Net Income 100000

Distribution Of Each Partner*2 ($20000*2) (40000)

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