David Contributes Investment Land with a Basis of $24,000 and an FMV

question 115

Multiple Choice

David contributes investment land with a basis of $24,000 and an FMV of $40,000 to a partnership for a 10% interest in partnership capital, profits, and losses. The land is subject to a $30,000 recourse liability, which is assumed by the partnership. The partnership has other recourse liabilities of $18,000. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. David must recognize a

• A)$3,000 capital gain.
• B)$3,000 capital loss.
• C)$1,200 capital gain.
• D)$1,200 capital loss.

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Definitions:

Adaptive Purposes

Refers to the various ways in which features, traits, or behaviors enhance the survival and reproductive success of organisms within specific environments.

Nature/nurture Debate

An ongoing discussion about the relative influence of genetic inheritance (nature) and environmental factors (nurture) on human development.

Dualism

The philosophical concept that reality or existence is divided into two distinct and opposite parts, such as mind and body.

Cognitive Psychology

A school of thought that studies how people think, learn, and remember.