Sharon Contributed Property to the Newly Formed QRST Partnership

question 31

Multiple Choice

Sharon contributed property to the newly formed QRST Partnership.The property had a $100,000 adjusted basis to Sharon and a $160,000 fair market value on the contribution date.The property was also encumbered by a $120,000 nonrecourse debt,which was transferred to the partnership on that date.Another partner,Rochelle,shares 30% of the partnership income,gain,loss,deduction,and credit.Under IRS regulations,Rochelle's share of the nonrecourse debt for basis purposes is:

• A)$20,000.
• B)$30,000.
• C)$36,000.
• D)$100,000.
• E)$120,000.

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Definitions:

Noncontrolling Interest

The portion of equity (ownership) interest in a subsidiary not held by the parent company, represented in the consolidated financial statements of the parent company.

Equity Method

An accounting technique used by companies to assess the profits earned by their investments in other companies, where they hold significant influence but not full control.

Excess Amortizations

Amortization expenses that exceed the norm or expectation for a particular asset, typically resulting from an aggressive estimation of the asset's useful life or value.