What is the basis of property contributed to a partnership?

Beanie and Cecil formed B&C Partnership on September 20, 2008. Beanie contributed cash of $195,000 and Cecil contributed office furniture with a fair market value of $66,000, land with a fair market value of $9,000, and an office building with a fair market value of $120,000. Cecil bought the furniture in January 2007 for $60,000, the land and building in 1998 for $8,000 and $100,000 respectively.

What is the basis of property at the time of the contribution?

1 Answer

  • 7 years ago
    Favorite Answer

    In the formation of a partnership, there is a carry-over basis and holding period for the partnership. With this is mind, fair market value is irrelevant. The reasoning for this is that gains/losses should be deferred until the property is actually exchanging ownership. The contributing partner is still a partial owner of the property and a full exchange has not occurred.

    Basis to Partnership:

    Cash: 195,000

    Furniture: 60,000

    Land: 8,000

    Building: 100,000

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