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:

Discretionary Responsibility

The expectation for companies or individuals to make ethical decisions and contribute to societal well-being, beyond their economic and legal obligations.

Ethical Responsibility

The obligation to act in a manner that is morally correct, considering the welfare and rights of others and the larger community.

Ethical Behaviour

Acting in ways consistent with what society and individuals typically think are good values.

Ethical Standards

Codes of practice and morality that guide the behavior and decision-making of individuals and organizations.