Tim, Al, and Pat Contributed Assets to Form the Equal

question 70

Multiple Choice

Tim, Al, and Pat contributed assets to form the equal TAP Partnership.Tim contributed cash of $40,000 and land with a basis of $80,000 (fair market value of $60,000) .Al contributed cash of $60,000 and land with a basis of $50,000 (fair market value of $40,000) .Pat contributed cash of $60,000 and a fully depreciated property ($0 basis) valued at $40,000.Which of the following tax treatments is not correct?

• A)Tim's basis in his partnership interest is $120,000.
• B)Al realizes and recognizes a loss of $10,000.
• C)Pat realizes a gain of $40,000 but recognizes $0 gain.
• D)TAP has a basis of $80,000, $50,000, and $0 in the land and property (excluding cash) contributed by Tim, Al, and Pat, respectively.
• E)All of these statement are correct.

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Definitions:

Modified AGI

Adjusted Gross Income adjusted by adding back certain deductions, often used to determine eligibility for various tax credits and retirement plans.

Qualified Adoption Expenses

Expenses that are necessary for and directly related to the legal adoption of an eligible child, which can include adoption fees, court costs, attorney fees, traveling expenses, and other expenses directly related to the adoption.

Child Tax Credit

A tax benefit in the United States designed to help families offset the cost of raising children by reducing their tax liability on a dollar-for-dollar basis.

AGI

An income calculation that includes all taxable income and is reduced by specific deductions, instrumental in determining tax obligations.