Rebecca and Stan Each Own a 50% Interest in a Business

question 132

Multiple Choice

Rebecca and Stan each own a 50% interest in a business entity.Rebecca contributed $200,000 for her ownership interest and Stan contributed land worth $200,000 (adjusted basis of $150,000) .Several months after the formation of the entity,the land is sold for $220,000.

• A)If the entity is a partnership, Stan's share of the recognized gain on the sale of the land is $35,000.
• B)If the entity is an S corporation, Stan's share of the recognized gain on the sale of the land is $60,000.
• C)If the entity is a C corporation, Stan's share of the recognized gain on the sale of the land is $10,000.
• D)If the entity is a limited liability company, Stan's share of the recognized gain on the sale of the land is $60,000.
• E)None of the above.

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Definitions:

Probability of the Statistic

The likelihood of observing a test statistic as extreme as, or more extreme than, the value observed under the assumption that the null hypothesis is true.

5%

A common significance level in statistical analysis, indicating that there is a 5% chance the observed results could have occurred by random chance, used to determine statistical significance.

Sample Size

Sample size refers to the number of observations or subjects used in a statistical study.

Research Hypothesis

Posits an expected causation, correlation, or difference between studied variables, formulated for scientific testing and verification.