Han Purchases a 25% Interest in the CHOP Partnership from Huang

question 46

Multiple Choice

Han purchases a 25% interest in the CHOP Partnership from Huang for $600,000. The partnership has assets with a basis of $1,600,000. What is the amount of the basis adjustment, if the partnership has a 754 election in place?

• A)$0
• B)$150,000 increase in Han's basis in his partnership interest
• C)$200,000 increase in Han's share of the basis in partnership assets
• D)$1,000,000 increase in partnership assets

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Definitions:

Oral Auction

An event where items or services are sold to individuals who make the highest spoken offer.

True Values

Refers to the actual, inherent value or worth of an item, property, or financial instrument, as opposed to its market price or cost.

Just over

Slightly more than a specified amount, number, or degree.

Consumer Surplus

The discrepancy between what consumers are ready and able to spend on a good or service and the amount they end up paying.