Question

A and B are partners in an equal general partnership. A has a basis of $30,000

in his partnership interest. B has a basis of $10,000 in her partnership interest.

What is the effect of each of the following events on the basis of each partner's

partnership interest? When is the effect taken into account?

Answer 1

Contribution of property by partnership reduces each partner's basis in the partnership by the amount of the partner's share of the partnership basis in the property contributed.

Effect on account of $A=5000\times 30000/40000= \$3750$

On $B=5000\times10000/40000=\$1250$