Binita Contributed Property with a Basis of $40,000 and a Value

question 173

Multiple Choice

Binita contributed property with a basis of $40,000 and a value of $50,000 to the BE Partnership in exchange for a 20% interest in partnership capital and profits. During the first year of partnership operations, BE had net taxable income of $30,000 and tax-exempt interest income of $10,000. The partnership distributed $10,000 cash to Binita. Binita's adjusted basis (outside basis) for her partnership interest at year-end is:

• A) $36,000.
• B) $38,000.
• C) $60,000.
• D) $70,000.
• E) $80,000.

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