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:

Air Movement

The flow or motion of air, often relevant in contexts of ventilation, weather, and aerodynamics.

Convection

The transfer of heat through the movement of fluids or gases, typically observed in the atmosphere or liquids.

Temperature Regulation

The physiological process that allows an organism to maintain its core internal temperature within a narrow range, regardless of external temperature.

Newborns

Infants in the first few weeks of life, highlighting a critical period for growth, feeding, and adaptation outside the womb.