Binita Contributed Property with a Basis of $40,000 and a Value

question 1

Multiple Choice

Binita contributed property with a basis of $40,000 and a value of $50,000 to the BE Partnership in exchange for a 20% interest in partnership capital and profits.During the first year of partnership operations, BE had net taxable income of $30,000 and tax-exempt interest income of $10,000.The partnership distributed $10,000 cash to Binita.Binita's adjusted basis (outside basis) for her partnership interest at year-end is:

• A)$36,000.
• B)$38,000.
• C)$60,000.
• D)$70,000.
• E)None of the above.

---

Definitions:

Profitability Ratios

Measures of a company’s overall financial performance by evaluating its ability to generate revenues in excess of expenses.

Inventory Turnover

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Return on Equity

A measure of the profitability of a business in relation to the equity, calculated as net income divided by shareholders' equity, expressing the company's ability to generate profits from its shareholders' investments.

Net Profit Margin

It is a financial metric that indicates how efficient a company is at generating profit compared to its revenue, expressed as a percentage.