Loretta Contributes Property to a Partnership in Exchange for a 25

question 2

Multiple Choice

Loretta contributes property to a partnership in exchange for a 25 percent partnership interest.The property contributed has a fair market value of $45,000 and a basis of $35,000 on the date of the contribution to the partnership.In addition, Loretta receives a 10 percent partnership interest, valued at $18,000, in exchange for services rendered to the partnership.What is Loretta's basis in her partnership interest, immediately after these transactions?

• A)$35,000
• B)$45,000
• C)$53,000
• D)$63,000
• E)None of the above

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Definitions:

Offer Price

The price at which an asset or service is offered for sale to potential buyers.

Ex-Rights Price

The ex-rights price is the stock price after the rights to purchase additional shares at a discount have been separated from the stock.

Rights Offering

A financial mechanism by which current shareholders are given the right to purchase additional shares before the public, often at a discount.

Subscription Price

The price at which existing shareholders can purchase additional shares in a rights offering.