During the Current Year, Norman Contributed Investment Property Held for Over

question 3

Multiple Choice

During the current year, Norman contributed investment property held for over one year to the Mary Ann Partnership for a 40 percent interest in partnership capital and profits.His tax basis in the property contributed was $8,000, and the property had a fair market value of $10,000 on the date of the contribution to the partnership.What gain or loss should Norman report as a result of the contribution of the property to the partnership in exchange for the 40 percent partnership interest?

• A)No gain or loss
• B)$2,000 long-term capital gain
• C)$2,000 ordinary income
• D)$10,000 long-term capital gain
• E)None of the above

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Definitions:

Retina

The light-sensitive layer of tissue at the back of the inner eye that converts light into electrical signals sent to the brain, allowing for vision.

Aqueous Humor

The clear fluid filling the space in the front of the eyeball between the lens and the cornea.

Glaucoma

Condition in which the fluid in the eye (aqueous humor) accumulates, increasing pressure in the eye and damaging nerve fibers.

Otoliths

Small crystals in the inner ear that contribute to the sense of balance by detecting movement and gravity.