Ali, a Contractor, Builds an Office Building for a Construction

question 87

Essay

Ali, a contractor, builds an office building for a construction partnership in exchange for a capital and profits interest in the partnership worth $500,000. Which of the following statements is correct?
A) Ali recognizes no income and the partnership can deduct nothing in the current year.
B) Ali recognizes $500,000 of ordinary income and the partnership can deduct $500,000 in the current year.
C) Ali recognizes $500,000 ordinary income and the partnership deducts the $500,000 over the building's MACRS recovery period as a depreciation expense.
D) Ali recognizes ordinary income in the current year in an amount equal to the depreciation deduction the partnership claims this year for the $500,000 capitalized amount.

• A) Ali recognizes no income and the partnership can deduct nothing in the current year.
• B) Ali recognizes $500,000 of ordinary income and the partnership can deduct $500,000 in the current year.
• C) Ali recognizes $500,000 ordinary income and the partnership deducts the $500,000 over the building's MACRS recovery period as a depreciation expense.
• D) Ali recognizes ordinary income in the current year in an amount equal to the depreciation deduction the partnership claims this year for the $500,000 capitalized amount.

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Definitions:

SSI Classification

Surgical Site Infection classification, categorizing post-operative infections based on severity and location, used to evaluate and reduce risks in surgical procedures.

Room Temperature

The temperature prevailing in a closed space, considered to be generally comfortable for humans, typically around 20-22 degrees Celsius (68-72 degrees Fahrenheit).

SSI Guidelines

Protocols and recommendations aimed at preventing Surgical Site Infections, emphasizing sterile procedures, antibiotic use, and patient care practices.