Rashad Contributes a Machine Having a Basis of $30,000 and an FMV

question 46

Multiple Choice

Rashad contributes a machine having a basis of $30,000 and an FMV of $25,000 to a partnership in exchange for a 20% interest in partnership capital, profits, and losses. Prior to the contribution, the partnership had recourse liabilities of $20,000. The partnership assumes a $20,000 recourse liability that is owed by Rashad on the machine. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. Rashad's basis in his partnership interest is

• A)$11,000.
• B)$18,000.
• C)$22,000.
• D)$34,000.

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Definitions:

Income Distribution

The way in which total income is shared amongst the population.

Liberalism

A school of thought advocating for personal liberty, the consent of those under governance, and fairness within the legal system.

Government Property

Assets owned by the state or government, including buildings, land, and resources.

Economic Assistance

Financial aid provided by governments or international institutions to support the economies of other nations, communities, or individuals in need.