Helmut Contributed Land with a Basis of $5,000 and an FMV

question 26

Multiple Choice

Helmut contributed land with a basis of $5,000 and an FMV of $10,000 to the HG Partnership five years ago to acquire a 50% partnership interest. This year the land is distributed to another partner, Gail, when its FMV is $11,000. No other distributions have been made since Helmut became a partner. When the land is distributed to Gail, Helmut recognizes a gain of

• A)$0.
• B)$2,500.
• C)$3,000.
• D)$5,000.

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Definitions:

Security Interest

A legal claim or right granted to a creditor over the borrower's assets as a security for the repayment of a loan.

Repossessed Collateral

Assets that have been taken back by the lender from the borrower, usually due to default on a loan.

Security Interest

A security interest is a legal claim or entitlement provided to a lender or creditor over the borrower's assets, serving as collateral for the repayment of a loan or obligation.

Attached

Pertaining to property law and commercial transactions, it refers to the legal process by which a security interest is formally linked to specific assets, making it enforceable against third parties.