Hunter Contributes Property Having a $75,000 FMV and a $65,000

question 1132

Multiple Choice

Hunter contributes property having a $75,000 FMV and a $65,000 adjusted basis which is subject to a $36,000 mortgage in exchange for a one- fourth interest in the ABC Partnership. The partnership owes no other debts, but does assume this mortgage. Profits and losses are shared equally and each partner has a one- fourth interest in partnership capital. Hunter's basis in the partnership is

• A) $48,000.
• B) $74,000.
• C) $38,000.
• D) $84,000.

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Definitions:

Modified Approach

An alternative accounting method allowing certain assets to be reported at historical cost rather than being continuously adjusted for market valuation.

Infrastructure Assets

Long-term physical assets that are foundational for providing public services, such as roads, bridges, water systems, and utilities.

Capitalizes

The process of recording an expenditure as an asset, rather than an expense, thus spreading the cost over the useful life of the asset.

Statement of Activities

A financial report primarily used by non-profit organizations, detailing revenues earned and expenses incurred over a specific period.