Pete Contributes Land (Basis of $80,000; Fair Market Value of $300,000)for

question 140

Multiple Choice

Pete contributes land (basis of $80,000; fair market value of $300,000) for a 25% interest in a partnership.The land is subject to a mortgage of $40,000 which the partnership assumes.As a result of the transfer,Pete:

• A) Has a basis in the partnership of $50,000.
• B) Has a basis in the partnership of $70,000.
• C) Has a basis in the partnership of $270,000.
• D) Must recognize a gain of $30,000.
• E) None of the above.

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Definitions:

Security Agreement

A legal document that provides a lender a security interest in a specific asset or property pledged as collateral for a loan.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower defaults.

Value

The importance, worth, or usefulness of something, often determined by its desirability, utility, or rarity.

UCC

A comprehensive set of laws governing commercial transactions in the United States, intended to harmonize the law of sales and other commercial transactions across jurisdictions.