Small Corp

question 5

Multiple Choice

Small Corp. and Big Corp. are equal partners in Medium Enterprises. The partnership has a net worth of $210,000, split 50/50 between the two corporations. Size Co. has been asked to join the partnership in a manner that will not have a tax consequence to the existing partners. When the transaction is complete, all three partners will have an equal interest. To accomplish this structural change, Size Co. must

• A) contribute $105,000 to the partnership treasury.
• B) contribute $210,000 to the partnership treasury.
• C) pay $70,000 to each of the partners.
• D) pay $105,000 to each of the partners.

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Definitions:

World Price

The global market price of a good or service, determined by supply and demand in the international marketplace.

No-Trade Policy

A policy or stance that restricts or prohibits trading certain goods, services, or information between countries or jurisdictions.

Free-Trade Policy

A policy approach that encourages international trade by minimizing or eliminating tariffs, quotas, and other trade barriers between countries.

World Price

The international market price of a good or service, influenced by global supply and demand factors.