In 2012, Corporation C Contributed Land (FMV $100,000 and Basis

question 20

Multiple Choice

In 2012, Corporation C contributed land (FMV $100,000 and basis $60,000) to Beta Partnership in exchange for a 25% interest in Beta.In 2012, Beta distributed the land to individual partner P, thereby terminating P's 30% interest in Beta.Immediately prior to distribution, the land was worth $110,000 and P's outside basis in his interest was $200,000.Which of the following is the correct set of tax consequences of the distribution?

• A)There are no consequences to Corporation C.P takes a $200,000 basis in the land.
• B)There are no consequences to Corporation C.P takes a $110,000 basis in the land.
• C)There are no consequences to Corporation C.P takes a $100,000 basis in the land.
• D)Corporation C must recognize a $50,000 gain and increase the basis in its partnership interest by $50,000.P takes a $200,000 basis in the land.
• E)Corporation C must recognize a $40,000 gain and increase the basis in its partnership interest by $40,000.P takes a $200,000 basis in the land.

---

Definitions:

Paying Attention

The process of focusing cognitive resources on a specific aspect of the environment while ignoring other perceivable information.

Organised

Having one's thoughts, actions, and possessions in order so as to operate efficiently and effectively.

Wernicke's Area

A region of the brain important for language development, located in the temporal lobe, responsible for the comprehension of speech.

Pituitary Gland

A small, pea-sized gland located at the base of the brain, considered the master gland because it produces hormones that regulate many functions of other endocrine glands.