Yong Contributes a Machine Having an Adjusted Basis of $20,000

question 53

Multiple Choice

Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for a 10% partnership interest. Yong had taken $10,000 of depreciation prior to the contribution. The partnership has no liabilities. As a result of the contribution, Yong must recognize

• A)no gain or loss.
• B)a $5,000 Sec. 1245 gain.
• C)a $5,000 capital gain.
• D)$10,000 ordinary income.

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Definitions:

Groupthink

A mental phenomenon where a group's need for consensus or uniformity leads to illogical or ineffective decision-making results.

Milgram's Experiment

A series of social psychology experiments conducted by Stanley Milgram, which measured the willingness of study participants to obey an authority figure who instructed them to perform acts conflicting with their personal conscience.

Obedience To Authority

The act of following orders from someone recognized as a figure of authority, despite personal morals or beliefs.

Foot-In-The-Door Effect

A psychological phenomenon where agreeing to a small request increases the likelihood of agreeing to a larger request later.