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:

Molds

Fungi that grow in the form of multicellular filaments, known as hyphae, which are often found in damp, warm conditions.

Spores

A resistant form of certain species of bacteria.

Keratins

are a family of fibrous structural proteins that are key components of hair, nails, and the outer layer of skin, as well as other epithelial tissues.

Agar

A gelatin-like substance derived from seaweed that gives a culture medium its semisolid consistency.