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On January 1 of the current taxable year, Sam and Barbara form an equal partnership. Sam makes a cash contribution of $60,000 and a contribution of property with an adjusted basis to him of $140,000 and a fair market value of $160,000 in exchange for his interest in the partnership. Barbara contributes property with an adjusted basis to her of $120,000 and a fair market value of $200,000 in exchange for her partnership interest. Which of the following statements is accurate regarding the income tax consequences of this transaction?

a. Sam's adjusted basis in his partnership interest is $200,000.

b. The partnership's adjusted basis in the noncash property contributed by Sam is $160,000.

c. Barbara recognized a gain of $80,000 with respect to her contribution of property.

d. Barbara's adjusted basis in her partnership interest is $200,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M938989

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