Cheryl and Joseph Formed a Partnership

question 4

Multiple Choice

Cheryl and Joseph formed a partnership.Cheryl received a 50% interest in partnership capital and profits in exchange for contributing land with a basis of $140,000 and a fair market value of $300,000.Joseph received a 50% interest in partnership capital and profits in exchange for contributing $300,000 of cash.Three years after the contribution date, the land contributed by Cheryl is sold by the partnership to a third party for $380,000.How much taxable gain will Cheryl recognize from the sale?

• A)$40,000.
• B)$120,000.
• C)$160,000.
• D)$200,000.
• E)None of the above.

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