10. Rex contributed land to the partnership of Rex, Tex, and Lex Partnership in
ID: 2531137 • Letter: 1
Question
10. Rex contributed land to the partnership of Rex, Tex, and Lex Partnership in exchange for a one-third interest in the Partnership. Rex’s adjusted basis in the land was $50,000 and its fair market value was $75,000. Rex’s Partnership capital account was credited with $75,000. Tex and Lex had each contributed $75,000 cash. Thus, each partner’s capital account was $75,000. What is Rex’s adjusted basis (outside basis) in his partnership interest?
a. $75,000
b. $50,000.
c. $37,500
d. cannot be determined from the facts stated
Explanation / Answer
Answer is b. $50,000.
Rex’s adjusted basis (outside basis) in his partnership interest is $50000 because Rex’s adjusted basis in the land was $50,000 and Rex’s Partnership capital account was credited with $75,000.
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