At the Beginning of the Year, Elsie's Basis in the E&G

question 22

Multiple Choice

At the beginning of the year, Elsie's basis in the E&G Partnership interest is $90,000.She receives a proportionate nonliquidating distribution from the partnership consisting of $10,000 of cash, unrealized accounts receivable (basis of $0, fair market value $40,000) , and land (basis of $30,000, fair market value of $50,000) .After the distribution, Elsie's bases in the accounts receivable, land, and partnership interest are:

• A)$0; $30,000; and $50,000.
• B)$0; $50,000; and $30,000.
• C)$40,000; $30,000; and $10,000.
• D)$40,000; $40,000; and $0.
• E)None of the above.

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Definitions:

Monopolistic Competition

A trading structure inhabited by many corporations pushing products that are analogous but not carbon copies, which affords them a degree of control over the market.

Differentiated Products

Goods that are fundamentally similar but are distinguished from each other by characteristics like quality, branding, and features.

Perfect Competition

A market structure characterized by many sellers and buyers, homogeneous products, and the absence of barriers to entry or exit.

Excess Capacity

A situation in which a firm produces less than the maximum output due to lack of demand or strategic choice, leading to underutilized resources.