Cramer Corporation and Mr

question 28

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 Mr. Chips' tax basis in its partnership interest?

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

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Definitions:

Decay

The gradual reduction in the strength, quality, or quantity of something over time.

Peg Method

A mnemonic technique that involves associating items to be remembered with a list of peg words you have memorized in advance.

Method of Loci

A mnemonic strategy that involves visualizing items to be remembered in specific physical locations.

Forgetting Curve

The graphic pattern representing the relationship between measures of learning and the length of the retention interval: As the retention interval gets longer, memory decreases.