Edith Contributes Land Having $100,000 FMV and a $85,000 Adjusted

question 71

Multiple Choice

Edith contributes land having $100,000 FMV and a $85,000 adjusted basis,which is subject to a $66,000 mortgage in exchange for a one-third interest in the EHK Partnership.The partnership owes no other liabilities.After the contribution,Kate,Edith,and Helen share profits and losses equally and each has a one-third interest in the partnership capital.Assume that Kate has a basis in her partnership interest of $50,000 before Edith's contribution to the partnership.The effect of Edith's contribution on partner Kate's basis is to

• A)decrease Kate's basis to $28,000.
• B)increase Kate's basis to $72,000.
• C)increase Kate's basis to $77,000.
• D)No effect on Kate's basis.

---

Definitions:

Immaculate Reception

A famous play in American football history during a 1972 playoff game, involving a last-second catch by Franco Harris of the Pittsburgh Steelers.

Franco Harris

A former professional American football player, best known as a Hall of Fame running back for the Pittsburgh Steelers.

Terry Bradshaw

A former American football quarterback who played professionally in the National Football League (NFL).

Multibillion-Dollar Company

A business entity with a valuation or market capitalization in the billions of dollars, indicating substantial financial size and business scale.