Atiqa Receives a Nonliquidating Distribution of Land from Her Partnership $$\begin{array} { | l | l | } \hline \text { Atiqa } & \text { Partnership } \\\hline \$ 28,000 & \$ 8,000\\\hline\end{array}$$

question 75

Multiple Choice

Atiqa receives a nonliquidating distribution of land from her partnership.The partnership purchased the land five years ago for $20,000.At the time of the distribution,it is worth $28,000.Prior to the distribution,Atiqa's basis in her partnership interest is $37,000.Due to the distribution,Atiqa and the partnership will recognize income of

• A) \[\begin{array} { | l | l | }
• \hline \text { Atiqa } & \text { Partnership } \\
• \hline \$ 28,000 & \$ 8,000\\\hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Atiqa } & \text { Partnership } \\
• \hline \$ 8,000 & \$ 0 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Atiqa } & \text { Partnership } \\
• \hline \$ 0 & \$ 0 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Atiqa } & \text { Partnership } \\
• \hline \$ 0 & \$ 8,000 \\
• \hline
• \end{array}\]

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Definitions:

Market Price

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

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit.

Downstream Division

Pertains to the part of a corporation involved in the refinement, processing, and sale of the end products derived from raw materials.

Transfer Price

The price at which divisions of a company transact with each other, often used for budgeting and tax purposes.