Tim, Al, and Pat Contributed Assets to Form the Equal

question 141

Multiple Choice

Tim, Al, and Pat contributed assets to form the equal TAP Partnership.Tim contributed cash of $40,000 and land with a basis of $80,000 (fair market value of $60,000) .Al contributed cash of $60,000 and land with a basis of $50,000 (fair market value of $40,000) .Pat contributed cash of $60,000 and a fully depreciated property ($0 basis) valued at $40,000.Which of the following tax treatments is not correct?

• A)Tim's basis in his partnership interest is $120,000.
• B)Al realizes and recognizes a loss of $10,000.
• C)Pat realizes a gain of $40,000 but recognizes $0 gain.
• D)TAP has a basis of $80,000, $50,000, and $0 in the land and property (excluding cash) contributed by Tim, Al, and Pat, respectively.
• E)All of these are correct.

---

Definitions:

Minimization

The action of reducing or downplaying the significance, value, or extent of something.

Defense Mechanism

Psychological strategies used unconsciously by individuals to protect themselves from anxiety or unacceptable thoughts and feelings.

Crisis Intervention

A short-term assistance provided to individuals facing an emergency or traumatic event, aimed at minimizing the impact and preventing long-term psychological trauma.

Education

The systematic process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits.