First of day of the partnership tax year


P-3 sells his 1/3 interest in a partnership to new P-4 for $120,000. P-3's share of the inside adjusted basis of the assets was $90,000 and his outside adjusted basis is $100,000. A Sec. 754 adjustment -to-basis election has been made. The partnership's single non-cash asset is a machine with a total inside adjusted basis of $60,000. What is P-4's portion of the depreciation of this machine if the depreciation rate for the year is 10% of the adjusted basis, and P-4's interest was acquired at the first of day of the partnership's tax year:

A. $6,000

B. $9,000

C. $8,000

D. $5,000

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Accounting Basics: First of day of the partnership tax year
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