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sasho [114]
3 years ago
10

During formation of Beecky partnership, Sam contributed property with an adjusted basis of $130,000 in exchange for a 25% intere

st in Beecky. The fair market value of the contributed property was $170,000 and the property was encumbered by a mortgage with a balance of $120,000. What amount of gain should Sam recognize from contributing the property into Beecky partnership?
Business
1 answer:
Natasha2012 [34]3 years ago
4 0

Answer:

Sam would not recognize any gain on the contribution.

Explanation:

A partner does not recognize a gain on the contribution from the appreciated property to a partnership unless it is subject to a liability that exceeds the contributing partner basis in the property. Sam is contributing property with a basis of $130,000, subject to a liability of $120,000, for a 25 % in partnership. As a result Sam would have a basis in the contributed property, minus the $120,000 liability assumed by the partnership, plus Sam's portion of the liability, 25% x $120,000 or $30,000.

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3 years ago
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Answer:

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Explanation:

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