Han Purchases a 25% Interest in the CHOP Partnership from Huang

question 39

Multiple Choice

Han purchases a 25% interest in the CHOP Partnership from Huang for $600,000. The partnership has assets with a basis of $1,600,000. What is the amount of the basis adjustment, if the partnership has a 754 election in place?

• A) $200,000 increase in Han's share of the basis in partnership assets
• B) $150,000 increase in Han's basis in his partnership interest
• C) $1,000,000 increase in partnership assets
• D) $0

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