Question

Miguel contributes land to a partnership with a basis of $12,000 and a fmv of $18,000. how much gain will miguel recognize?

Answer 1

The gain will be $0.

Here given that Miguel contributes land to a partnership with a basis $12,000. The Fair Market Value is $18000.

Since Miguel is transferring land to partnership, she can get a tax-free rollover. This tax-free rollover ignores the tax to be paid for the gain from the transfer only.

Since Miguel did not choose to transfer the land at the fair market value, the deemed proceeds constitute $12000.

So there will be no gain at all.

Hence Miguel will gain $0.

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