At the beginning of 2016 margarets adjusted basis in

18. At the beginning of 2016, Margaret’s adjusted basis in her 50 percent interest in MP
Partnership, a calendar year general partnership, was $10,000. During 2016, Margaret did
not make any additional contributions to MP Partnership, and Margaret’s share of MP
Partnership liabilities did not change. During 2016, MP Partnership distributed $5,000 to
Margaret, and MP Partnership had the following items of partnership income, deduction,
gain and loss for 2016:
Separately stated taxable income $30,000
Tax-exempt interest $10,000
Capital loss ($20,000)
What is Margaret’s adjusted basis in her partnership interest in MP Partnership at the end
of 2016?

a. 0
b. $10,000
c. $15,000
d. $25,000
19. Sam, Sue, and Shelley formed a partnership. Sam received a 50 percent interest in
the partnership in exchange for land with an adjusted basis to him of $30,000 and a fair
market value of $50,000. Sue received a 25 percent interest in the partnership in exchange
for $25,000 of cash. Shelley received a 25 percent interest in the partnership in exchange
for $25,000 of cash. Six years after the date of contribution, the land contributed by Sam
was sold by the partnership to an unrelated third party for $90,000. How much gain was
required to be allocated to Sam as a result of the sale by the partnership?
20. Larry and Moe are equal partners in the capital and profits of The LM Partnership.
Larry and Moe are not related to each other. On August 1, 2015, Larry sold 100 shares of
Last Chance Mining Corp. stock to the partnership for its fair market value of $7,000.
Larry had purchased the stock in 2000 for $10,000. What, if any, is Larry’s recognized loss
on the sale of this stock?
21. Larry and Moe of the partnership in the prior question admit Curly to the
partnership which is renamed The LMC Partnership. The total value of the partnership
was $120,000 on December 31, 2015. On January 1, 2016, Curly contributed $40,000 to the
partnership, and Curly’s partnership capital account was credited with $40,000. The
partnership’s ordinary net income for 2016 was $60,000. As of December 31, 2016, Curly’s
basis in his partnership interest and his 2016 income taxable income from the partnership
were:
22. On July 1, 2016, Linda acquired a 30% interest in Cupcake Bakery, a partnership,
by contributing to the partnership property with a an adjusted basis to her of $5,000 and a

fair market value of $12,000 subject to a mortgage of $8,000 which was assumed by the
partnership. What is Linda’s basis in her interest in Cupcake Bakery?
a. $4,000
b. $5,000
c. $6,400
d. $-0-