Jose Contributed Nondepreciable Property with a Basis of $25,000 and a Fair

question 10

Multiple Choice

Jose contributed nondepreciable property with a basis of $25,000 and a fair market value of $36,000 to the ABC Partnership in 2008 in exchange for a 40% interest in the partnership.In 2009, he receives a nonliquidating distribution from the partnership of other property with a basis to the partnership of $9,000 and a fair market value of $40,000.The basis in his partnership interest at the time of the distribution was $20,000.How much gain or loss does Jose recognize on the distribution? (Assume no other distributions have been made to Jose, the property he originally contributed is still owned by the partnership, and this is not a disguised sale transaction.)

• A)$0 gain or loss.
• B)$11,000 gain.
• C)$20,000 gain.
• D)$31,000 gain.
• E)None of the above.

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Definitions:

Job Evaluation System

A method used by organizations to assess the value of each job in relation to others within the company to determine appropriate compensation levels.

Point Method

A technique used in job evaluation that involves quantifying job elements to determine the value of a position within an organization.

Competency-Based Pay

A salary system that bases compensation on an employee's skills, abilities, and performance rather than job title or position alone.

Commission Pay

A form of compensation based on a percentage of sales or profits generated by an employee, commonly used in sales roles to motivate performance.