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3. On January 1 of the current year, Anna and Jason form an equal partnership. Anna...

3. On January 1 of the current year, Anna and Jason form an equal partnership. Anna contributes $50,000 cash and a parcel of land (adjusted basis of $200,000; fair market value of $150,000) in exchange for her interest in the partnership. Jason contributes property (adjusted basis of $180,000; fair market value of $200,000) in exchange for his partnership interest. Which of the following statements is true concerning the income tax results of this partnership formation?

a. Jason recognizes a $20,000 gain on his property transfer.

b. Jason has a $200,000 tax basis for his partnership interest.

c. Anna has a $200,000 tax basis for her partnership interest.

d. Anna realizes and recognizes a $50,000 loss.

e. The partnership has a $200,000 adjusted basis in the land contributed by Anna

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Answer #1

Answer E :

The partnership has a $200,000 adjusted basis in the land contributed by Anna

In the given situation Rule 722 and 723 will apply, Jason's basis for his partnership interest will be the same as his $ 1,80,000 basis for the property contributed, Anna will have $ 1,50,000 tax basis for her partnership interest,.

So the Land Contributed by anna is 2,00000 and neither of both partners will not recognize neither gain or loss on there property contribution.

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