In Return for Services Rendered to It by C, the ABC

question 39

Multiple Choice

In return for services rendered to it by C, the ABC partnership transfers a one-fourth capital interest to C when it only has one asset, a tract of land with a basis of $20,000 and fair market value of $30,000.The partnership has no liabilities.As a result, ABC's recognized gain and basis in the land, respectively, are

• A)$10,000 and $30,000
• B)$2,500 and $22,500
• C)$2,500 and $27,500
• D)$10,000 and $20,000

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Definitions:

Break-Even Point

The point where the amount produced or sold matches the overall expenses, leading to neither a profit nor a loss.

Contribution Margin

A profitability metric that calculates the amount of revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.

Selling Price

The amount of money for which a product or service is offered for sale to customers.

Contribution Margin Ratio

The percentage of revenue remaining after variable costs have been subtracted, indicating how much revenue is available to cover fixed costs and generate profit.