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?

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Definitions:

Negative Reinforcers

Stimuli whose removal following a behavior increases the likelihood of that behavior being repeated in the future.

Spontaneous Recovery

The reappearance of a previously extinguished response after a period without exposure to the conditioned stimulus.

Negative Reinforcement

A behavioral principle where the removal of an unfavorable outcome or stimulus increases the likelihood of a behavior being repeated.

Discrimination

The unfair or biased treatment toward various groups of individuals, frequently rooted in differences in race, age, gender, or physical abilities.