Alice Contributes Equipment (Fair Market Value of $50,000; Adjusted Basis

question 11

Multiple Choice

Alice contributes equipment (fair market value of $50,000; adjusted basis of $15,000) , subject to a $10,000 liability, to form Orange Partnership, a general partnership. Mary contributes $40,000 cash. Alice and Mary share equally in partnership profits and losses. What is Alice's and Mary's basis for their partnership interests?

• A) $10,000 to Alice, $45,000 to Mary.
• B) $25,000 to Alice, $25,000 to Mary.
• C) $15,000 to Alice, $40,000 to Mary.
• D) $5,000 to Alice, $40,000 to Mary.
• E) $20,000 to Alice, $45,000 to Mary.