On January 4, 2015, Smith and White contributed $4,000 and $6,000 in cash, respectively, and formed the Macro General Partnership. The partnership agreement allocated profit and losses 40% to Smith and 60% to White. In 2015, Macro purchased property from an unrelated seller for $10,000 cash and a $40,000 mortgage note that was the general liability of the partnership. Macro's liability
a. Increases Smith's partnership basis by $16,000.
b. Increases Smith's partnership basis by $20,000.
c. Increases Smith's partnership basis by $24,000.
d. Has NO effect on Smith's partnership basis.
Answer: A
Tax
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