Yong Contributes a Machine Having an Adjusted Basis of $20,000

question 53

Multiple Choice

Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for a 10% partnership interest. Yong had taken $10,000 of depreciation prior to the contribution. The partnership has no liabilities. As a result of the contribution, Yong must recognize

• A)no gain or loss.
• B)a $5,000 Sec. 1245 gain.
• C)a $5,000 capital gain.
• D)$10,000 ordinary income.

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Definitions:

Grasp

The act of seizing, holding, or obtaining an object or concept with the hand, mind, or understanding.

Sternal Area

the region located in the middle of the chest, overlying the sternum bone, which is significant in medical assessments for its proximity to the heart and lungs.

Intermittent Abdominal Pain

Periodic or sporadic pain in the belly area, which can vary in intensity and duration.

Dysuria

Painful urination resulting from bacterial infection of the bladder and obstructive conditions of the urethra.