The BR LLC Owns an Unrealized Receivable with a Basis

question 225

Multiple Choice

The BR LLC owns an unrealized receivable with a basis of $0 and fair market value of $200,000 plus cash of $200,000. If BREE distributes $20,000 of the receivable to 50% member Brenda and $20,000 of cash to 50%
Member Renee, which one of the following statements is true?

• A) Brenda recognizes $20,000 of capital gain.
• B) The partnership recognizes $20,000 of ordinary income.
• C) Renee recognizes $10,000 of ordinary income.
• D) Brenda recognizes $10,000 of ordinary income.
• E) Because both partners receive the same value, none of the parties recognizes gross income.

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Definitions:

Elasticity of Demand

A determination of demand elasticity in relation to the price changes of a product.

Interaction Among Firms

Refers to the relationships and activities that occur between companies, such as competition, cooperation, and market structure impacts.

Elasticity of Demand

This refers to the measure of how much the quantity demanded of a good or service changes in response to a change in its price.

Marginal Cost

The heightened cost incurred by the production of an additional unit of a good or service.