David Contributes Investment Land with a Basis of $24,000 and an FMV

question 115

Multiple Choice

David contributes investment land with a basis of $24,000 and an FMV of $40,000 to a partnership for a 10% interest in partnership capital, profits, and losses. The land is subject to a $30,000 recourse liability, which is assumed by the partnership. The partnership has other recourse liabilities of $18,000. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. David must recognize a

• A)$3,000 capital gain.
• B)$3,000 capital loss.
• C)$1,200 capital gain.
• D)$1,200 capital loss.

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Definitions:

Concise Language

The use of few words to convey a message clearly and directly, without unnecessary verbiage.

Concise Language

The use of few words to convey much information or meaning, emphasizing clarity and brevity.

Hypertension

A medical condition characterized by consistently high blood pressure.

Sodium

A chemical element represented by the symbol Na. It's a soft, silvery-white, highly reactive metal.