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Gerald received a one-third capital and profit (loss) interest in XYZ Limited Partnership (LP). In exchange for this interest, Gerald contributed a building with an FMV of $31,000. His adjusted basis in the building was $15,500. In addition, the building was encumbered with a $9,300 nonrecourse mortgage that XYZ LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution

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Cricetus

Answer:

The appropriate answer is "$9,300".

Explanation:

The given values are:

FMV,

= $31,000

Adjusted basis,

= $15,500

Encumbered mortgage,

= $9,300

Now,

The Gerald's outside basis will be:

= [tex]Adjusted \ basis-Encumbered \ mortgage+Share \ of \ mortgage[/tex]

On substituting the given values, we get

= [tex]15,500 - 9,300+(\frac{9,300}{3})[/tex]

= [tex]15,500 - 9,300 + 3,100[/tex]

= [tex]18,600-9,300[/tex]

= [tex]9,300[/tex] ($)

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