Rajesh Contributed Appreciated Property to the RS Partnership in Year

question 88

Multiple Choice

Rajesh contributed appreciated property to the RS Partnership in year 1. In year 4, that property was distributed to Simon. Which one of the following statements best captures the tax consequences of the distribution?

• A) Distributions are tax-deferred transactions; because no cash is distributed, neither the partners nor the partnership recognize gain on the distribution.
• B) The partnership recognizes the precontribution gain; Simon's basis in the property is increased by the amount of recognized gain.
• C) Simon recognizes the precontribution gain and increases his basis in the partnership interest; the partnership's basis in other property is increased by the amount of recognized gain.
• D) Rajesh recognizes the precontribution gain and increases his basis in the partnership interest; Simon's basis in the distributed property is increased by the amount of recognized gain.
• E) Rajesh recognizes the precontribution gain and increases his basis in the partnership interest; the partnership's basis in other property is increased by the amount of recognized gain.

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Definitions:

Customer Relationships

The management of interactions and engagement with customers to foster loyalty and long-term engagement.

Divisions Coordination

The management practice of aligning the operations and goals of different departments or units within an organization to optimize overall performance.

Functionally Organized Firm

A firm in which various divisions perform separate tasks, such as production and sales.

Divisions Perform

Divisions perform refers to the operational and financial performance of separate business units or segments within a larger company, often evaluated to assess their contribution to the overall success of the corporation.