Dylan, Luke, and Hannah Form a Partnership

question 66

Multiple Choice

Dylan, Luke, and Hannah form a partnership.Dylan contributes land with a fair market value of $25,000 (basis of $15,000) in exchange for a 25% interest.Luke contributes equipment with a $35,000 fair market value (basis of $38,000) in exchange for a 35% interest, and Hannah contributes a building with a $100,000 fair market value (basis = $35,000) and a mortgage of $60,000 (assumed by the partnership) in exchange for a 40% interest.What is the partnership's basis in the building it received from Hannah?

• A)$35,000
• B)$60,000
• C)$65,000
• D)$100,000

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Definitions:

Wage Rate

The amount of compensation an individual receives per unit of time for their labor.

Labor Supply

Refers to the total hours that workers are willing and able to work for at a given wage rate in a specific period.

Apple Pickers

Workers engaged in the agricultural practice of harvesting apples from orchards.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers matches the quantity of labor supplied by workers, resulting in a balanced labor market.