Sarah Contributed Fully Depreciated ($0 Basis) Property Valued at $50,000

question 38

Essay

Sarah contributed fully depreciated ($0 basis) property valued at $50,000 to the RSTU Partnership in exchange for a
25% interest in partnership capital and profits. During the first year of partnership operations, RSTU had net taxable income of $200,000 and tax-exempt income of $4,000. The partnership distributed $10,000 cash to Sarah. Her share of partnership recourse liabilities on the last day of the partnership year was $20,000. What is Sarah's adjusted basis (outside basis) for her partnership interest at the end of the tax year?

---

Definitions:

Common Genes

Genes that are shared by two or more species, indicating a common ancestry or similar evolutionary pressures.

Theory

An explanation using an integrated set of principles that organizes observations and predicts behaviors or events.

Clinical Psychologist

A professional specializing in diagnosing and treating mental illness, emotional disturbances, and dysfunctional behavior through various therapeutic methods.

Case Study

A detailed examination of a single subject (an individual, group, or event), used as a research method to gain in-depth insights.