On December 1, Antonio, a Member of a Three- Person

question 52

Multiple Choice

On December 1, Antonio, a member of a three- person partnership, purchases investment securities from the partnership for their $37,000 FMV. All partners share profits and losses equally. The securities were acquired by the partnership for $25,000 cash in March of the current year. What amount and character of gain will Antonio recognize because of this transaction?

• A) $4,000 ordinary income
• B) $12,000 ordinary income
• C) $0 gain
• D) $4,000 short- term capital gain

---

Definitions:

Hybrid Costing System

A costing methodology that combines features of both job-order and process costing systems, suitable for businesses producing both unique and standard products.