When Property Is Contributed to a Partnership in Exchange for a Capital

question 80

Multiple Choice

When property is contributed to a partnership in exchange for a capital and profits interest, when does the partner's holding period begin for the partnership interest?

• A) The day after the contribution date.
• B) The day the property was contributed.
• C) The day the contributed property was purchased.
• D) The day the partnership interest was acquired.
• E) Either (or both) c. and d. may be true, depending upon the types of property contributed.

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Definitions:

Lump Sum

A single payment made at a particular time, as opposed to a series of periodic payments.

Lump Sum Payment

A single, one-time payment made for a purchase or to settle a debt, as opposed to installments.

Annuity Due

A type of annuity in which payments are made at the beginning of each period, rather than at the end.

Present Value

The present worth of a sum of money or a series of cash flows expected in the future, assuming a certain rate of return.