Kathy Purchases a One-Third Interest in the KDP Partnership from Paul

question 38

Multiple Choice

Kathy purchases a one-third interest in the KDP Partnership from Paul for $60,000.Just prior to the sale,Paul's outside and inside bases in KDP are $48,000.KDP's balance sheet includes the following: $\begin{array} { l r r } \text { Assets: } & \text { Basis } & \text { FMV } \\\text { Cash } & \$ 48,000 & \$ 48,000 \\\text { Land held for irvestrnent } & 96,000 & 132,000\end{array}$ $\begin{array}{l}\text { Liabilities ard Capital: }\\\begin{array} { l l l } \text { Capital } & \text { Paul } & 48,000 \\& \text { Kristi } & 48,000 \\& \text { David } & 48,000\end{array}\end{array}$ If KDP has a §754 election in place,what is Kathy's special basis adjustment?

• A)$0.
• B)$36,000.
• C)$12,000.
• D)None of the choices are correct.

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Definitions:

Random Trial

A type of experiment where outcomes are determined entirely by chance, eliminating any bias from the experimenters.

Confidence Interval

An interval of values, calculated from statistics of a sample, which probably encloses an unidentified population parameter.

Standard Error

An estimate of the variability or precision of a sample mean (or other estimate) as an estimate of the population mean.

Random Sample

A sample drawn in such a way that each member of the population has an equal chance of being selected, ensuring that the sample represents the population as a whole.