TEC Partners Was Formed During the Current Tax Year

question 24

Multiple Choice

TEC Partners was formed during the current tax year. It incurred $10,000 of organizational expenses, $80,000 of startup expenses, $200,000 of syndication costs, and $5,000 of transfer taxes to retitle property contributioned by a partner. Which of the following statements is correct regarding these payments?

• A) TEC may deduct $5,000 of the syndication costs; the remaining amount must be amortized.
• B) TEC must amortize the $10,000 of organizational expenses over 180 months.
• C) TEC's startup expenses are amortized over 60 months.
• D) TEC must add the transfer tax to the basis of the contributed property.
• E) None of the above statements are true.

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Definitions:

Capital

Funds or resources that individuals or businesses use to invest in assets or operations with the goal of generating income or profit.

Free Cash Flow Valuation Approach

A method of valuing a business by estimating the cash that can be generated after accounting for capital outlays necessary to maintain or expand the asset base.

Present Value

A calculation that determines the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Distributable Cash Flows

The amount of cash flow available to be distributed to security holders, often used in the context of REITs and master limited partnerships.