Neckole owns a 40% interest in partnership N&O. She contributes a computer syste

Question

Neckole owns a 40% interest in partnership N&O. She contributes a computer system with a FMV of $20,500 and an adjusted basis of $13,450 to the partnership. Which of the following is true? A) The partnership's basis in the computer system will be $13,450 and Neckole's outside basis will increase by $13,450. B) The partnership's basis in the computer system will be $13,450 and Neckole's outside basis will increase by $20,500. C) The partnership's basis in the computer system will be $20,500 and Neckole's outside basis will increase by $13,450. D) The partnership's basis in the computer system will be $20,500 and Neckole's outside basis will increase by $20,500.

Explanation / Answer

Answer is option B

The partnership's basis in the computer system will be $13,450 and Neckole's outside basis will increase by $20,500.

Explanation :

Adjusted base value describes the amount a taxpayer has invested in his or her assets. It is calculated for taxation point of view. The fair market value of a business or asset is the estimation of the price that would be paid to the owner upon a sale.

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