when would a partner recognize a gain on property given to a partnership
The basis of an interest in a partnership acquired by the contribution of property is the adjusted basis of such property to the contributing partner. A decrease in a partner’s individual liabilities by reason of the assumption by the partnership of such liabilities is treated as a distribution of money to the partner, which in turn reduces the basis of the partner’s interest (but not below zero). When Burr became a 20% partner, he was relieved of 80% of his $12,000 mortgage, or $9,600. Burr’s basis in his partnership interest is the $8,000 basis in the property contributed less the $9,600 liability relief (limited to zero). Burr will recognize a gain of $1,600.