Stella Acquired a 25% Interest in the STUV Partnership by Contributing

question 73

Multiple Choice

Stella acquired a 25% interest in the STUV Partnership by contributing land having an adjusted basis of $32,000 and a fair market value of $100,000. The land was subject to a $48,000 mortgage, which was assumed by STUV. No other liabilities existed at the time of contribution. What is Stella's basis in her partnership interest?

• A)$0
• B)$32,000
• C)$52,000
• D)$64,000

---

Definitions:

Dividend Payout Ratio

The percentage of earnings paid to shareholders in dividends, calculated as dividends per share divided by earnings per share.

Growth Rate of Earnings

It is the rate at which a company's earnings are increasing or decreasing over a specific period, often used by investors to gauge the company's profitability trends.

Constant-Growth DDM

A model for valuing a stock by assuming constant dividends that grow at a steady rate indefinitely.

Beta

A gauge for determining the volatility or inherent risk of a security or portfolio against the market at large.