Crystal Contributes Land to the Newly Formed CD Partnership in Exchange

question 122

Essay

Crystal contributes land to the newly formed CD Partnership in exchange for a 40% interest.The land has an adjusted basis and fair market value of $200,000 and is subject to a liability of $50,000, which the partnership assumes.None of this liability is repaid at year-end.At the end of the year, the partnership has trade accounts payable of $60,000.Assume all liabilities are allocated proportionately to the partners.Total partnership income for the year is $300,000.What is Crystal's basis in her partnership interest at the end of the year?

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Definitions:

COV(X,Y)

Covariance between two variables X and Y, measuring the extent to which the variables change together and indicating the direction of their linear relationship.

Marginal Probability

The probability of occurring of a single event without consideration of any other events; it’s the likelihood of a single outcome.

Variance

Variance is a statistical measure that represents the degree of spread in a dataset's numbers; it quantifies how far each number in the set is from the mean and thus from every other number in the set.

Marginal Probability

The probability of a single event occurring without consideration of any other events, typically found in the context of probability distributions.