Bethany contributes a building to a partnership with a basis of $120,000 and a FMV of $200,000. Bethany's basis in her partnership interest would:
not increase at all.
increase by $80,000.
increase by $120,000.
increase by $200,000.
is it B
Yes, you are correct. Bethany's basis in her partnership interest would increase by $80,000.
In a partnership, when a partner contributes property, the partnership adjusts the partner's basis in their partnership interest. The adjustment is equal to the fair market value (FMV) of the property minus any liabilities assumed by the partnership.
In this case, Bethany contributes a building with a basis of $120,000 and a FMV of $200,000. Since there is no information provided about any liabilities assumed by the partnership, we assume there are none. Therefore, her basis in her partnership interest would increase by the difference between the FMV and her original basis, which is $200,000 - $120,000 = $80,000.