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

Accounting

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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 $24,000. His adjusted basis in the building was $12,000. In addition, the building was encumbered with a $7,200 nonrecourse mortgage that XYZ, LP assumed at the time the property was contributed. What is Gerald's outside basis immediately after his contribution?

Multiple Choice

• $4,800.

• $7,200.

• $16,800.

• $19,200.