Question

Xena and xavier form the xx llc. xena contributes cash of $20,000, land (basis = $40,000; fair market value = $25,000), equipment (basis = $0; fair market value = $35,000), and inventory (basis = $30,000; fair market value = $40,000). xavier contributed $100,000 of cash. how much is the partnership's basis in the land, equipment, and inventory, and how much is xena's basis in the partnership interest?

Answer 1

Answer: $0 equipment, $20,000 land, $30,000 inventory, $90,000 partnership interest.

Explanation: The asset basis in the partnership between Xena and Xavier is the same same their basis. In the scenario above, Xena's basis is the same as Xena's partnership basis in asset.

Xena's asset basis include;

Cash = $20,000

Land basis = $40,000

Inventory basis = $30,000

Equipment basis = $0

Therefore Xena's basis in the partnership interest :

$(20,000 + 40,000 + 30,000 + 0) = $90,000