Cramer Corporation and Mr

question 40

Multiple Choice

Cramer Corporation and Mr. Chips formed a general partnership. Cramer contributed $500,000 cash, and Mr. Chips contributed a building with a $500,000 FMV and $300,000 tax basis. The partnership immediately borrowed $700,000 of recourse debt. What is Cramer's tax basis in its partnership interest?

• A) $500,000
• B) $1,200,000
• C) $850,000
• D) $650,000