Cramer Corporation and Mr

question 73

Multiple Choice

Cramer Corporation and Mr. Chips formed a partnership in which Cramer is the general partner and Mr. Chips is a limited partner. 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) $850,000
• C) $650,000
• D) $300,000

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Definitions:

Price Level

A general price average spanning the full range of goods and services in an economy.

Aggregate Supply Curve

A visual depiction that illustrates the overall amount of products and services that producers in an economy can and are willing to offer across various price points.

Aggregate Demand Curve

A curve that shows the total demand for goods and services within an economy at various price levels, typically illustrating an inverse relationship between price level and output demanded.

Aggregate Supply

The total supply of goods and services that firms in a national economy plan on selling during a specific time period.