Answer:
A.$9,200
B.$40,500
C.$5,400
Explanation:
a. land encumbered with a $18,400 mortgage ×50% =$9,200
Hence:
Mortgage $18,400
Less $9,200
Balance $9,200
Therefore Pam must often try to put into consideration the effects of changes in debt before determining the distribution
effects.
Pam is treated as making a net contribution of cash to the partnership of $9,200, the difference between the full mortgage of $18,400 and her allocated share of the debt of $9,200. This deemed contribution thus increases Pam’s basis in Meddoc from $36,700 to $45,900 which makes Pam not to recognize any gain or loss on the current distribution.
b.Pam takes a carryover basis in the land equal to $40,500.
c.Pam’s outside basis in the partnership after the distribution is as follows:
Basis in Meddoc $36,700
Plus: Deemed contribution $9,200
Less: Land(40,500)
Remaining basis in Meddoc $5,400