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Gerald received a one-third capital and profit (loss) interest in XYZ Limited Partnership (LP). In...

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Accounting

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 a FMV of $32,000. His adjusted basis in the building was $16,000. In addition, the building was encumbered with a $9,600 nonrecourse mortgage that XYZ, LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution?

  • $6,400.

  • $9,600.

  • $22,400.

  • $25,600.

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