Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $11,000 of cash and land with an FMV of $56,000. Her basis in the land is $21,000. Andrew contributes equipment with an FMV of $13,000 and a building with an FMV of $34,000. His basis in the equipment is $9,000, and his basis in the building is $21,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew

There is no gain to be recognized when assets are being transferred between living individuals or entities due to this falling under the Carryover basis.

This carryover basis of the asset will in general, be the same basis as the cost or basis of the asset.

There will therefore be a $0 gain to the SA General Partnership. Gains will be calculated if the partnership wants to dispose of the assets.

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