Mark and Addison Formed a Partnership

question 103

Multiple Choice

Mark and Addison formed a partnership. Mark received a 25% interest in partnership capital and profits in exchange for land with a basis of $40,000 and a fair market value of $60,000. Addison received a 75% interest in partnership capital and profits in exchange for $180,000 of cash. Three years after the contribution date, the land contributed by Mark is sold by the partnership to a third party for $76,000. How much taxable gain will Mark recognize from the sale?

• A) $0
• B) $9,000
• C) $16,000
• D) $24,000
• E) $36,000

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Definitions:

Bounded Rationality

A concept suggesting that individuals make decisions based on the limited information they have, constrained by their mental capacity and the time available.

Evidence-Based

An approach that involves making decisions or taking actions based on the systematic analysis of scientific evidence.

Bounded Rationality

A concept that decision-makers are limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision.

Temporal Immediacy

The urgency or closeness in time of an event, emphasizing the importance of timely action or response.