On January 1 of the Current Year,Sarah and Bart Form

question 38

Multiple Choice

On January 1 of the current year,Sarah and Bart form an equal partnership.Sarah makes a cash contribution of $60,000 and a property contribution (adjusted basis of $160,000;fair market value of $140,000) in exchange for her interest in the partnership.Bart contributes property (adjusted basis of $120,000;fair market value of $200,000) in exchange for his partnership interest.Which of the following statements is true concerning the income tax results of this partnership formation?

• A)Sarah has a $200,000 tax basis for her partnership interest.
• B)The partnership has a $140,000 adjusted basis in the property contributed by Sarah.
• C)Bart recognizes an $80,000 gain on his property transfer.
• D)Bart has a $120,000 tax basis for his partnership interest.
• E)None of the statements is true.

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Definitions:

Krebs Cycle

A series of enzymatic reactions in the mitochondria of cells that oxidize acetyl CoA to carbon dioxide and water, generating ATP and other high-energy compounds.

Spiracles

Small openings on the surface of some animals, especially insects, which lead to the respiratory system, allowing for gas exchange.

Ventilation

The process of actively moving air or water over a respiratory surface.

Tracheal Tubes

Air-conducting tubes in the respiratory systems of some invertebrates, notably insects, facilitating gas exchange.