Ali, a Contractor, Builds an Office Building for a Construction

question 82

Multiple Choice

Ali, a contractor, builds an office building for a construction partnership in exchange for a capital and profits interest in the partnership worth $500,000. Which of the following statements is correct?

• A)Ali recognizes $500,000 of ordinary income and the partnership can deduct $500,000 in the current year.
• B)Ali recognizes no income and the partnership can deduct nothing in the current year.
• C)Ali recognizes $500,000 ordinary income and the partnership deducts the $500,000 over the building's MACRS recovery period as a depreciation expense.
• D)Ali recognizes ordinary income in the current year in an amount equal to the depreciation deduction the partnership claims this year for the $500,000 capitalized amount.

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Definitions:

Positive Symptoms

Refers to an excess or distortion of normal functions, often observed in disorders such as schizophrenia, including hallucinations or delusions.

Prodromal Phase

An early stage in the development of a disorder, marked by mild symptoms or signs that may precede the full-blown manifestation of the disorder.

Fuller Recovery

A term denoting a more complete process of recuperation from illness or injury, aiming for a return to a state of complete health.

Schizophrenia

An acute mental syndrome marked by skewness in intellectual acuity, observational capacities, emotional reactions, conversational skills, personal recognition, and behavioral displays.