Bao Had Investment Land That He Purchased in 1990 for $80,000

question 43

Multiple Choice

Bao had investment land that he purchased in 1990 for $80,000. Two years ago, when the land was contributed to a partnership, the FMV was $50,000. The land is inventory in the hands of the partnership. The partnership then sells the land in the current year for $46,000. The partnership's recognized loss is

• A)a $34,000 capital loss.
• B)a $34,000 ordinary loss.
• C)a $30,000 capital loss and a $4,000 ordinary loss.
• D)a $4,000 capital loss and a $30,000 ordinary loss.

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Definitions:

Responsive Pleading

A legal document filed in response to an initial complaint, addressing and contesting the points raised.

Motion to Dismiss

A legal request submitted to a court, asking to dismiss a particular case for specific reasons before going to trial.

Discovery

Formal investigation prior to trial. Opposing parties use various methods, such as interrogatories and depositions, to obtain information from each other and from witnesses to prepare for trial.

Counterclaim

A legal claim brought against the plaintiff by the defendant within the same lawsuit.