On January 1 of the Current Year, Anna and Jason

question 49

Multiple Choice

On January 1 of the current year, Anna and Jason form an equal partnership. Anna contributes $50,000 cash and a parcel of land (adjusted basis of $200,000; fair market value of $150,000) in exchange for her interest in the partnership. Jason contributes property (adjusted basis of $180,000; fair market value of $200,000) in exchange for his partnership interest. Which of the following statements is true concerning the income tax results of this partnership formation?

• A) Jason recognizes a $20,000 gain on his property transfer.
• B) Jason has a $200,000 tax basis for his partnership interest.
• C) Anna has a $250,000 tax basis for her partnership interest.
• D) Anna realizes and recognizes a $50,000 loss.
• E) The partnership has a $150,000 adjusted basis in the land contributed by Anna.

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Definitions:

Common Stock

Common stock signifies ownership in a corporation, granting holders a vote in corporate matters and a portion of the company's earnings via dividends.

Treasury

The department within a government or corporation responsible for managing monetary assets and debt obligations.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with predetermined dividend payments.

Cumulative

Describing something that increases or accumulates over time, often used in reference to dividends or data.