Scott Provides Accounting Services Worth $40,000 to the ABC Partnership

question 6

Multiple Choice

Scott provides accounting services worth $40,000 to the ABC Partnership in exchange for a 20% interest in the capital and profits of the partnership.The tax result to Scott is

• A)a partnership interest with a zero basis and no gain or loss.
• B)a partnership interest with a zero basis and $40,000 of ordinary income.
• C)a partnership interest with a $40,000 basis and $40,000 capital gain.
• D)a partnership interest with a $40,000 basis and $40,000 ordinary income.

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Definitions:

Premature Dominance

The early establishment of control or influence in a situation before all factors have been appropriately considered.

Pre-Editing Phase

The initial stage in the editing process where content is reviewed for clarity, coherence, and alignment with objectives prior to detailed editing.

Full Consideration

The thorough examination of all aspects, implications, and viewpoints of an issue or decision.