Essay
Adam contributes property with a fair market value of $3,000,000 and an adjusted basis of $1,200,000 to AP Partnership.Adam shares in $2,000,000 of partnership debt under the liability sharing rules,giving him an initial adjusted basis for his partnership interest of $3,200,000.One month after the contribution,Adam receives a cash distribution from the partnership of $3,000,000.Adam would not have contributed the property if the partnership had not contractually obligated itself to make the distribution.Assume Adam's share of partnership liabilities will not change as a result of this distribution.
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Correct Answer:
Verified
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