David and Joycelyn Form an Equal Partnership in the Current

question 117

Multiple Choice

David and Joycelyn form an equal partnership in the current year.No special allocation is provided for in the partnership agreement.During the year David contributes land having a $90,000 basis and a $100,000 FMV in exchange for the initial partnership interest.In addition,the partnership earns $50,000 of ordinary income while partnership liabilities increase from zero to $30,000 by the end of the tax year.The partnership earns $20,000 of tax-exempt interest during the year.David's basis at the end of the current year is

• A)$115,000.
• B)$125,000.
• C)$130,000.
• D)$140,000.

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Definitions:

Trucking Company

A business entity that specializes in the transportation of goods and materials over land, typically using large vehicles like trucks.

Merchant

An individual or business entity engaged in the sale of goods or services, often characterized by expert knowledge or the ability to deal in a particular commercial field.

Physical Possession

The actual holding or control of an object, property, or asset by an individual or entity.

Risk Of Loss

The potential for an investment, asset, or transaction to result in a financial loss rather than a gain.