TEC Partners Was Formed During the Current Tax Year

question 170

Multiple Choice

TEC Partners was formed during the current tax year. It incurred $10,000 of organizational expenses, $80,000 of startup expenses, and $5,000 of transfer taxes to retitle property contributed by a partner. The property had been held as MACRS property for ten years by the contributing partner, and had an adjusted basis to the partner of $300,000 and fair market value of $400,000. Which of the following statements is correct regarding these items?

• A) TEC treats the contributed property as a new MACRS asset placed in service on the date the property title is transferred.
• B) TEC must amortize the $10,000 of organizational expenses over 180 months.
• C) TEC's deducts the first $5,000 of startup expenses and amortizes the remainder over 180 months.
• D) TEC must capitalize the transfer tax and treat it as a new asset placed in service on the date the property is contributed.
• E) None of the above statements are true.

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Definitions:

The Phenotype

The observable physical or biochemical characteristics of an organism, as determined by both genetic makeup and environmental influences.

The Genotype

Refers to the genetic composition of an organism, including all its genes, contributing to its unique phenotype.

Nature

The inherent features of something or the physical world and everything in it, including plants, animals, the landscape, and other features and products of the earth.

Nurture

The influence of environmental factors and care given to the development and growth of an individual.