For a 30% interest in partnership capital, profits, and losses, Carol contributes a machine with a basis of $40,000 and an FMV of $80,000 The parenhi $70,000 recourse liability on the machine. At the time of the contribution, the partnership had recourse liabilities of $10,000 Partners share the economic risk of los fam recourse liabilities in the same way they share partnership losses Following the contribution, Cal a capital loss due to the contribution of $6,000 and a zero basis in the partnership interest. O a capital gain due to the contribution of $6,000 and a zero basis in the partnership interest. O a $34,000 basis in the partnership interest and no gain or loss. O a $43,000 basis in the partnership interest and no gain or loss

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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For a 30% interest in partnership capital, profits, and losses, Carol contributes a machine with a basis of $40,000 and an FMV of $80,000. The parmenship assumes
$70,000 recourse liability on the machine. At the time of the contribution, the partnership had recourse liabilities of $10,000. Partners share the economic risk of loss from
recourse liabilities in the same way they share partnership losses. Following the contribution, Carol
O a capital loss due to the contribution of $6,000 and a zero basis in the partnership interest.
O a capital gain due to the contribution of $6,000 and a zero basis in the partnership interest.
O a $34,000 basis in the partnership interest and no gain or loss.
O a $43,000 basis in the partnership interest and no gain or loss.
Transcribed Image Text:For a 30% interest in partnership capital, profits, and losses, Carol contributes a machine with a basis of $40,000 and an FMV of $80,000. The parmenship assumes $70,000 recourse liability on the machine. At the time of the contribution, the partnership had recourse liabilities of $10,000. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. Following the contribution, Carol O a capital loss due to the contribution of $6,000 and a zero basis in the partnership interest. O a capital gain due to the contribution of $6,000 and a zero basis in the partnership interest. O a $34,000 basis in the partnership interest and no gain or loss. O a $43,000 basis in the partnership interest and no gain or loss.
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