Helmut Contributed Land with a Basis of $5,000 and an FMV

question 100

Multiple Choice

Helmut contributed land with a basis of $5,000 and an FMV of $10,000 to the HG Partnership five years ago to acquire a 50% partnership interest. This year the land is distributed to another partner, Gail, when its FMV is $11,000. No other distributions have been made since Helmut became a partner. When the land is distributed to Gail, Helmut recognizes a gain of

• A) $5,000.
• B) $0.
• C) $2,500.
• D) $3,000.

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Definitions:

Effective Yield

A measure of the return on an investment, accounting for the effect of compounding interest more accurately than nominal yield.

Interest Revenue

Income earned by a company for lending money or allowing another entity to use its funds, reported on the income statement.

Temporary Decline

A short-term decrease in the value of an asset or market without indication of a prolonged downturn.

Available-For-Sale

A classification of securities that are not classified as held-to-maturity or trading securities, marked to market periodically, with changes in value reported in other comprehensive income.