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.

---

Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Net Sales

Gross sales minus sales returns, allowances, and discounts.

Ending Inventory

The final value of goods available for sale at the end of an accounting period after all inventory purchases and sales have been accounted for.

Inventory Turnover Rate

A measure of how many times a company's inventory is sold and replaced over a specific period, often used to assess efficiency.