During 2014, Norman Contributed Investment Property Held for Over One

question 61

Multiple Choice

During 2014, Norman contributed investment property held for over one year to the Mary Ann Partnership for a 40 percent interest in partnership capital and profits. His tax basis in the property contributed was $8,000, and the property had a fair market value of $10,000 on the date of the contribution to the partnership. What gain or loss should Norman report as a result of the contribution of the property to the partnership in exchange for the 40 percent partnership interest?

• A)No gain or loss
• B)$2,000 long-term capital gain
• C)$2,000 ordinary income
• D)$10,000 long-term capital gain
• E)None of the above

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Definitions:

Alimony

Payments made to a spouse or ex-spouse under a divorce or separation agreement. It is considered taxable income for the recipient and tax deductible for the payor.

Divorce Agreement

A legal document outlining the division of assets, spousal support, and other arrangements agreed upon by individuals undergoing a divorce.

Child Support

Financial contributions required by law to be made by a non-custodial parent to support their minor child or children.

Self-Employed

An individual who works for themselves and is not employed by another entity, often responsible for their own taxes and benefits.