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.

---

Definitions:

Bipolar Neurons

A type of neuron with two extensions (one axon and one dendrite), found in sensory organs like the retina of the eye.

Olfactory Cortex

A part of the brain involved in the perception and recognition of smells.

Taste Buds

Sensory organs located on the tongue and other parts of the mouth, responsible for detecting the five types of taste: sweet, sour, salty, bitter, and umami.

Vallate Papillae

Large, dome-shaped taste buds located at the back of the tongue, involved in the sensation of taste.