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

question 73

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. Her 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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Definitions:

Future Outflow

Projected cash payments or disbursements that a business expects to incur as a result of current operations or future activities.

Resources

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External Users

Individuals or entities outside a company, such as investors, creditors, regulators, and customers, who use the company's financial information to make decisions.