Sebastian Contributed Property with a Tax Basis of $30,000 and a Fair

question 50

Multiple Choice

Sebastian contributed property with a tax basis of $30,000 and a fair market value of $75,000 to a new partnership in exchange for a 50 percent interest.The property was encumbered by a $50,000 mortgage that the partnership assumed.The other partner contributed $25,000 cash.What is Sebastian's basis in his partnership interest?

• A)$5,000
• B)$25,000
• C)$30,000
• D)$50,000

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Definitions:

Direct Labor

The labor costs directly tied to the production of goods or services, including wages for workers who physically manufacture products.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including but not limited to utilities, rent, and salaries for non-direct labor.

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Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are significant in cost.