Brenda Contributes Appreciated Property to Her Business Entity in a Transaction

question 33

Multiple Choice

Brenda contributes appreciated property to her business entity in a transaction which qualifies for nonrecognition of gain.Brenda's ownership interest is 60%.The business entity later sells the appreciated property for $110,000.The property is not depreciable.Which of the following statement(s) is correct?

• A)If the entity is a partnership,Brenda's gross income is increased by $41,000 [($35,000 ´ 100%)+ ($10,000 ´ 60%)] in the year of the sale of the property by the partnership.
• B)If the entity is a C corporation,the corporation's gross income is increased by $10,000 in the year of the sale of the property by the corporation.
• C)If the entity is an S corporation,the S corporation's gross income is increased by $10,000 in the year of the sale of the property by the S corporation and Brenda's gross income is increased by $6,000 ($10,000 ´ 60%).
• D)All of the above.
• E)None of the above.

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