Elijah Contributes Securities with a $90,000 FMV (Purchased in 2008

question 98

Essay

Elijah contributes securities with a $90,000 FMV (purchased in 2008 at a cost of $50,000)to become a one-third partner in the EJK Partnership on January 1 of the current year. The securities are sold on December 15 of the current year for $105,000. How much of the partnership's capital gain from the sale of these securities should be allocated to Elijah?

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Definitions:

Causal Arguments

Arguments that establish a cause-and-effect relationship between two or more things.

Inductive Argument

A type of reasoning in which the premises seek to supply strong evidence for (not absolute proof of) the truth of the conclusion.

Positive Correlation

The incidence of one event increases when the second one increases.

Occurrence of Events

The happening or taking place of incidents or actions, often considered in terms of their frequency or significance.