Helmut Contributed Land with a Basis of $5,000 and an FMV

question 26

Multiple Choice

Helmut contributed land with a basis of $5,000 and an FMV of $10,000 to the HG Partnership five years ago to acquire a 50% partnership interest. This year the land is distributed to another partner, Gail, when its FMV is $11,000. No other distributions have been made since Helmut became a partner. When the land is distributed to Gail, Helmut recognizes a gain of

• A)$0.
• B)$2,500.
• C)$3,000.
• D)$5,000.

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Definitions:

Cash Payments

Refers to transactions where cash is paid out by the business, such as to suppliers, employees, or for other expenses.

Current Year

The ongoing year or the period of time that is presently being accounted for in financial or calendar terms.

Cash Dividend

A payment made by a corporation to its shareholders, usually in the form of cash, as a share of the company's profits.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership of a portion of a company, giving the holder voting rights.