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:

Performance Deficiency

A situation where an individual's or an entity's output fails to meet the expected or required standards.

Management Challenge

A situation that tests the skills, knowledge, and abilities of those in leadership positions to handle complex organizational issues.

Information Competency

The ability to find, evaluate, use, and communicate information in various formats effectively.

Intellectual Capital

The intangible value of a company's employee knowledge, business training, and any proprietary information that contributes to the company's competitive advantage.