Allen Contributed Land, Which Was Being Held for Sale to Allen's

question 116

Multiple Choice

Allen contributed land, which was being held for sale to Allen's customers, to a partnership in exchange for a 20% interest. The partnership uses the land in its business for three years and then sells the property. When the property was contributed, it had a basis in Allen's hands of $500,000 and an FMV of $600,000. The partnership sells the land for $700,000. The gain reported by the partnership is

• A)$100,000 of ordinary income and $100,000 of Sec. 1231 gain.
• B)$100,000 of Sec. 1231 gain and $100,000 of capital gain.
• C)$200,000 of ordinary income.
• D)$200,000 of Sec. 1231 gain.

---

Definitions:

Mowrer's Two-Factor Theory

Mowrer's Two-Factor Theory is a psychological theory that integrates classical conditioning and operant conditioning to explain the development of phobias and anxiety.

Avoidance

A behavioral response aimed to prevent an unpleasant outcome or stimulus, often developed as a coping mechanism in both humans and animals.

Feared Stimulus

A specific object, situation, or activity that elicits a strong fear response due to conditioning or traumatic experiences.