K Owns 25 Percent of a Partnership

question 14

Multiple Choice

K owns 25 percent of a partnership.K's basis in the partnership was $12,000 before she received a current proportionate distribution of equipment with a basis of $14,000 and a liability against it of $6,000.By what total amount would the remaining partners need to reduce their bases?

• A)$1,500
• B)$2,500
• C)$3,500
• D)$4,500
• E)$5,500

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Definitions:

Recognizable Interest

An interest in property or a transaction that is legally identifiable and protectable.

Tenants in Common

A form of co-ownership where each tenant holds an undivided interest in property, but without right of survivorship.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, which the borrower pays to the lender as a fee over time.