On January 1 of the Current Year,Sarah and Bart Form

question 38

Multiple Choice

On January 1 of the current year,Sarah and Bart form an equal partnership.Sarah makes a cash contribution of $60,000 and a property contribution (adjusted basis of $160,000;fair market value of $140,000) in exchange for her interest in the partnership.Bart contributes property (adjusted basis of $120,000;fair market value of $200,000) in exchange for his partnership interest.Which of the following statements is true concerning the income tax results of this partnership formation?

• A)Sarah has a $200,000 tax basis for her partnership interest.
• B)The partnership has a $140,000 adjusted basis in the property contributed by Sarah.
• C)Bart recognizes an $80,000 gain on his property transfer.
• D)Bart has a $120,000 tax basis for his partnership interest.
• E)None of the statements is true.

---

Definitions:

Higher Incomes

Refers to earnings that are significantly above the median or average levels within a given community, region, or country, typically associated with better quality of life and financial security.

Representative Sample

A subset of a population that accurately reflects the members of the entire population, used in statistical analysis to make inferences about the whole population.

Civil Society

The aggregate of non-governmental organizations and institutions that manifest interests and will of citizens.

Politicians

Individuals who are actively involved in politics, especially ones holding or seeking office in government.