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Laura Is a Real Estate Developer and Owns Property That

question 85

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Laura is a real estate developer and owns property that is treated as inventory (not a capital asset) in her business.
She contributes a parcel of this land (basis of $15,000) to a partnership, also to be held as inventory. The fair market value of the property is $12,000 at the contribution date. After three years, the partnership sells the land for $10,000. The partnership will recognize a $5,000 ordinary loss on sale of the property.


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