Yong Contributes a Machine Having an Adjusted Basis of $20,000

question 53

Multiple Choice

Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for a 10% partnership interest. Yong had taken $10,000 of depreciation prior to the contribution. The partnership has no liabilities. As a result of the contribution, Yong must recognize

• A)no gain or loss.
• B)a $5,000 Sec. 1245 gain.
• C)a $5,000 capital gain.
• D)$10,000 ordinary income.

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Definitions:

Job Order Cost Systems

An accounting system used to assign costs to specific customer orders or batches, tracking the direct materials, direct labor, and overhead costs incurred for each.

Unit Costs

Unit costs, also known as cost per unit, represent the total expense incurred to produce, store, and sell one unit of a product or service, including direct and indirect costs.

Labor Costs

The total amount of money a business spends on employee salaries, wages, and other benefits.

Individual Job

Definition: A distinct task or project undertaken by a business, where costs and revenues can be directly attributed and tracked.