Tara and Robert Formed the TR Partnership Four Years Ago

question 61

Multiple Choice

Tara and Robert formed the TR Partnership four years ago.Because they decided the company needed some expertise in multimedia presentations,they offered Katie a 1/3 interest in partnership capital if she would come to work for the partnership.On July 1 of the current year,the unrestricted partnership interest (fair market value of $25,000) was transferred to Katie.How should Katie treat the receipt of the partnership interest in the current year?

• A)Nontaxable.
• B)$25,000 ordinary income.
• C)$25,000 short-term capital gain.
• D)$25,000 long-term capital gain.

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Definitions:

Premack Principle

The Premack Principle is a psychological concept that states a more preferred activity can be used as a reward to reinforce the performance of a less preferred activity.

Spanking

A form of corporal punishment that involves hitting the buttocks of another person to cause physical pain, typically used as a disciplinary measure.

Physical Punishment

The application of physical power aimed at making someone feel pain, without causing harm, in order to achieve correction or manage behavior.

Negative Reinforcement

A behavioral principle where the removal of an unpleasant stimulus strengthens a behavior’s occurrence.