During the Current Year, Norman Contributed Investment Property Held for Over

question 3

Multiple Choice

During the current year, Norman contributed investment property held for over one year to the Mary Ann Partnership for a 40 percent interest in partnership capital and profits.His tax basis in the property contributed was $8,000, and the property had a fair market value of $10,000 on the date of the contribution to the partnership.What gain or loss should Norman report as a result of the contribution of the property to the partnership in exchange for the 40 percent partnership interest?

• A)No gain or loss
• B)$2,000 long-term capital gain
• C)$2,000 ordinary income
• D)$10,000 long-term capital gain
• E)None of the above

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Contra-revenue Account

An account that is offset against a revenue account on the income statement, typically relating to sales returns, allowances, and discounts.

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The legal process by which a lender takes control of a property, evicts the homeowner, and sells the home after the homeowner fails to make full principal and interest payments on their mortgage.