Mark and Addison Formed a Partnership

question 108

Multiple Choice

Mark and Addison formed a partnership.Mark received a 25% interest in partnership capital and profits in exchange for land with a basis of $40,000 and a fair market value of $60,000.Addison received a 75% interest in partnership capital and profits in exchange for $180,000 of cash.Three years after the contribution date, the land contributed by Mark is sold by the partnership to a third party for $76,000.How much taxable gain will Mark recognize from the sale?

• A)$0.
• B)$9,000.
• C)$24,000.
• D)$36,000.
• E)None of the above.

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Definitions:

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome.

Illusory Correlations

The perception of a relationship between two variables even when no such relationship exists.

Commonsense Understanding

The basic level of practical knowledge and reasoning about everyday situations and tasks.

Scientific Attitude

A mindset characterized by skepticism, open-mindedness, and the reliance on empirical evidence and systematic observation for understanding phenomena.