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:

Canada

A country located in the northern part of North America, known for its vast landscapes, multicultural diversity, and being a member of the Commonwealth representing a constitutional monarchy.

Wealthy Planters

Individuals or families who own large agricultural estates, often worked by slaves or laborers, and hold significant social, economic, and political power.

Backcountry Farmers

Farmers in the 18th and 19th centuries located in remote rural areas of the American colonies and the United States, often living on the frontier and practicing subsistence farming.

Benedict Arnold

An American military officer who served during the Revolutionary War before defecting to the British side, becoming synonymous with the term traitor.