Yong Contributes a Machine Having an Adjusted Basis of $20,000

question 53

Multiple Choice

Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for a 10% partnership interest. Yong had taken $10,000 of depreciation prior to the contribution. The partnership has no liabilities. As a result of the contribution, Yong must recognize

• A)no gain or loss.
• B)a $5,000 Sec. 1245 gain.
• C)a $5,000 capital gain.
• D)$10,000 ordinary income.

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Definitions:

Stroma

The supportive tissue or matrix of an organ, as in the stroma of the ovary, or the dense fluid within the chloroplast where the Calvin cycle occurs in photosynthesis.

Thylakoid Compartment

A membranous structure within chloroplasts of plant cells and cyanobacteria, containing chlorophyll and other pigments for photosynthesis.

ATP Synthase

An enzyme that plays a key role in the process of cellular respiration, synthesizing ATP from ADP and inorganic phosphate during the process of oxidative phosphorylation.

Thylakoid Membrane

A membrane-bound compartment inside chloroplasts and cyanobacteria, involved in the light-dependent reactions of photosynthesis.