On January 1 of the current year, Sarah and Bart form an equal partnership. Sarah makes a cash contribution of $60,000 and a property contribution (adjusted basis of $160,000; fair market value of $140,000) in exchange for her interest in the partnership. Bart contributes property (adjusted basis of $120,000; fair market value of $200,000) in exchange for his partnership interest. Which of the following statements is true concerning the income tax results of this partnership formation?
a. Sarah has a $200,000 tax basis 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 gain on his property transfer.
d. Bart has a $120,000 tax basis for his partnership interest.
e. None of the statements is true.
Your answer is D.
Bart basis for his partnership interest will be the ...
The partnership basis for Sarah Bart is analyzed.