TEC Partners Was Formed During the Current Tax Year

question 170

Multiple Choice

TEC Partners was formed during the current tax year. It incurred $10,000 of organizational expenses, $80,000 of startup expenses, and $5,000 of transfer taxes to retitle property contributed by a partner. The property had been held as MACRS property for ten years by the contributing partner, and had an adjusted basis to the partner of $300,000 and fair market value of $400,000. Which of the following statements is correct regarding these items?

• A) TEC treats the contributed property as a new MACRS asset placed in service on the date the property title is transferred.
• B) TEC must amortize the $10,000 of organizational expenses over 180 months.
• C) TEC's deducts the first $5,000 of startup expenses and amortizes the remainder over 180 months.
• D) TEC must capitalize the transfer tax and treat it as a new asset placed in service on the date the property is contributed.
• E) None of the above statements are true.

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Definitions:

Parallel

An approach or system configuration where tasks or processes are run simultaneously, often to increase efficiency or throughput.

Series

A sequence of data points or elements that follow a particular order, often used in statistics, mathematics, and various scientific disciplines to analyze trends or patterns.

Optimal Maintenance Policy

The most efficient and effective strategy for maintaining equipment or systems, balancing costs with downtime and operational performance.

Inventory

The total amount of goods and materials held by a business to support production, future sales, or servicing.