Paul Sells One Parcel of Land (Basis of $100,000) for Its

question 47

Multiple Choice

Paul sells one parcel of land (basis of $100,000) for its fair market value of $160,000 to a partnership in which he owns a 60% capital interest.Paul held the land for investment purposes.The partnership is in the real estate development business, and will build residential housing (for sale to customers) on the land.Paul will recognize:

• A)$0 gain or loss.
• B)$36,000 ordinary income.
• C)$36,000 capital gain.
• D)$60,000 ordinary income.
• E)$60,000 capital gain.

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Definitions:

Teres Major

A muscle in the upper arm, which helps in the rotation and adduction of the shoulder.

Supraspinatus

A muscle situated on the upper part of the back that assists in the abduction of the arm.

Abducts

Refers to the movement of a limb or other part away from the midline of the body or from another part.

Joints

Structures in the body where two or more bones are connected, allowing for varied degrees of movement.