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:

Sherman Act

A foundational United States antitrust law passed in 1890, aiming to restrict monopolistic practices and promote market competition.

Interstate Commerce Act

A United States federal law that was designed to regulate the railroad industry and its monopolistic practices by requiring reasonable and just rates, prohibiting rebates, and ensuring fair treatment of railway users.

Wheeler-Lea Act

The federal law of 1938 that amended the Federal Trade Commission Act by prohibiting unfair and deceptive acts or practices of commerce (such as false and misleading advertising and the misrepresentation of products).

Antitrust Laws

Legislation designed to promote competition and prevent monopolies and other practices that restrain trade.