On January 1 of the current year, Sarah and Bart form an equalpartnership. Sarah makes a cash contribution of $60,000 and aproperty contribution (adjusted basis of $160,000; fair marketvalue of $140,000) in exchange for her interest in the partnership.Bart contributes property (adjusted basis of $120,000; fair marketvalue of $200,000) in exchange for his partnership interest. Whichof the following statements is true concerning the income taxresults of this partnership formation? a. Sarah has a $200,000 taxbasis for her partnership interest. b. The partnership has a$140,000 adjusted basis in the property contributed by Sarah c.Bart recognizes an $80,000 tax gain on his property transfer. d.Bart has a $120,000 tax basis for his partnership interest. e. Noneof the statements is true.
On January 1 of the current year, Sarah and Bart form an equalpartnership. Sarah makes a cash contribution of $60,000 and aproperty contribution (adjusted basis of $160,000; fair marketvalue of $140,000) in exchange for her interest in the partnership.Bart contributes property (adjusted basis of $120,000; fair marketvalue of $200,000) in exchange for his partnership interest. Whichof the following statements is true concerning the income taxresults of this partnership formation? a. Sarah has a $200,000 taxbasis for her partnership interest. b. The partnership has a$140,000 adjusted basis in the property contributed by Sarah c.Bart recognizes an $80,000 tax gain on his property transfer. d.Bart has a $120,000 tax basis for his partnership interest. e. Noneof the statements is true.
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