Which of the Following Statements Is Always Correct Regarding Assets

question 242

Multiple Choice

Which of the following statements is always correct regarding assets acquired by a newly formed partnership? If a partner contributes:

• A) Depreciable property: the partnership treats the property as newly acquired depreciable property, and may claim a § 179 deduction.
• B) Unrealized (cash-basis) receivables: the partnership will report a capital gain when the receivable is collected.
• C) Inventory (in the partner's hands): the partnership reports ordinary income if the property is held as a capital asset and sold within five years of the contribution date.
• D) Land valued at less than its basis: the partnership reports a § 1231 loss if the property is sold at a loss.
• E) All of the above statements are always true.

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