Mirabelle Contributed Land with a $5,000 Basis and a $9,000 $$\begin{array} { | l | l | } \hline \text { Mirabelle } & \text { Sergio } \\\hline 0 & 0 \\\hline\end{array}$$

question 105

Multiple Choice

Mirabelle contributed land with a $5,000 basis and a $9,000 FMV to MS Partnership four years ago.This year the land is distributed to Sergio,another partner in the partnership.At the time of distribution,the land had a $12,000 FMV.How much gain should Mirabelle and Sergio recognize?

• A) \[\begin{array} { | l | l | }
• \hline \text { Mirabelle } & \text { Sergio } \\
• \hline 0 & 0 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Mirabelle } & \text { Sergio } \\
• \hline \$ 4,000 &0 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Mirabelle } & \text { Sergio } \\
• \hline \$ 4,000 & \$ 3,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Mirabelle } & \text { Sergio } \\
• \hline \$ 5,500 & \$ 1,500 \\
• \hline
• \end{array}\]

---

Definitions:

Compounded Monthly

Interest calculation method where the interest is added to the principal amount every month, leading to interest being earned on interest.

Overdue Accounts

Financial accounts that have not been paid by the due date, often subject to late fees or other penalties.

Provincial Government

A level of government below the national or federal level, responsible for the governance of a province or region.

Replacement Stream

A sequence of cash flows expected to be received or paid over time in order to replace an asset or meet an obligation.