Greg, a 40percent Partner in GSS Partnership, Contributed Land to the Partnership

question 24

Essay

Greg, a 40percent partner in GSS Partnership, contributed land to the partnership in exchange for his partnership interest when the partnership was formed. At the time, his basis in the land was $30,000 and its FMV was $133,000. Three years after the partnership was formed, GSS Partnership decided to sell the land to an unrelated party for $150,000. When the land is sold, how much of the gain should be allocated to each partner of GSS Partnership if Sam and Steve are each 30percent partners?

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Definitions:

Subducts

Occurs when one tectonic plate moves under another and sinks into the Earth's mantle due to plate tectonic processes.

Subduction Zone

A region at convergent plate boundaries where one tectonic plate moves under another into the mantle, often causing earthquakes and volcanic activity.

Seawater

The saltwater that makes up the oceans and seas covering more than 70% of the Earth's surface, comprising a complex solution of various salts and minerals.

Mid-Ocean Ridge

A subaquatic chain of mountains created by the movement of tectonic plates, leading to the formation of new ocean floor.