Emma Contributes Property Having a $24,000 FMV and a $15,000

question 82

Multiple Choice

Emma contributes property having a $24,000 FMV and a $15,000 adjusted basis and also renders legal services valued at $22,000 in exchange for a 30% interest in the capital and profits of the ABC partnership.The tax results to Emma will be

• A)no income is recognized and a partnership basis of $37,000.
• B)ordinary income of $22,000 and a partnership basis of $37,000.
• C)ordinary income of $22,000 and a partnership basis of $46,000.
• D)no income is recognized and a partnership basis of $46,000.

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Definitions:

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Marginal Profit

The rise in earnings achieved by selling an extra unit of a product or service.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Competitive

A state of being in which entities vie against each other to achieve a goal, such as market dominance or winning a contest.