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:

Aggressively

Acting with force or determination, often to achieve a goal or assert one's presence, sometimes implying hostility.

TV News

Broadcasted or streamed updates on current events or affairs, presented through television networks.

Concerned About Crime

The state of being worried or anxious about the potential or actual presence of criminal activity in one's vicinity.

Law Enforcement

The activity of ensuring adherence to laws by discovering and punishing persons who violate the rules and norms governing that society.