Question : 31. During 2014, Norman contributed investment property held for over one : 1313613

31. 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

32. Leslie contributes a building worth $88,000, with an adjusted basis of $40,000, to a partnership in exchange for a 50 percent interest in the partnership’s capital and profits. What is the amount of Leslie’s basis in her partnership interest immediately after the contribution?

a. $20,000

b. $40,000

c. $44,000

d. $88,000

e. None of the above

33. An equal partnership is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building with a fair market value of $150,000, adjusted basis of $55,000, and subject to a liability of $60,000. Gerry contributes cash of $100,000. What amount of gain must Rita recognize as a result of this transaction?

a. $95,000

b. $35,000

c. $5,000

d. $0

e. None of the above

34. An equal partnership is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building with a fair market value of $150,000, adjusted basis of $55,000, and subject to a liability of $60,000. Gerry contributes cash of $100,000. What is Rita’s basis in her partnership interest immediately after formation of the partnership?

a. $25,000

b. $35,000

c. $65,000

d. $70,000

e. None of the above

35. An equal partnership is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building with a fair market value of $150,000, adjusted basis of $55,000 and subject to a liability of $60,000. Gerry contributes cash of $100,000. What is the partnership’s basis in the building contributed by Rita?

a. $55,000

b. $60,000

c. $90,000

d. $150,000

e. None of the above

36. Loretta contributes property to a partnership in exchange for a 25 percent partnership interest. The property contributed has a fair market value of $45,000 and a basis of $35,000 on the date of the contribution to the partnership. In addition, Loretta receives a 10 percent partnership interest, valued at $18,000, in exchange for services rendered to the partnership. What is Loretta’s basis in her partnership interest, immediately after these transactions?

a. $35,000

b. $45,000

c. $53,000

d. $63,000

e. None of the above

37. A partner’s interest in a partnership is decreased by:

a. Capital gains of the partnership.

b. Distributions from the partnership.

c. Taxable income of the partnership.

d. Additional contributions by the partner.

e. None of the above.

38. Sabrina contributes a building with an adjusted basis of $80,000 to a partnership. The fair market value of the building is $100,000 on the date of the contribution. What is Sabrina’s basis in her partnership interest immediately after the contribution?

a. $0

b. $40,000

c. $80,000

d. $100,000

e. None of the above

39. Jamie decides to contribute cash and property to a partnership she and her friends started. She contributes a building worth $260,000 that she purchased for $100,000 and she also contributes $40,000 in cash. What is her basis in the partnership?

a. $100,000

b. $140,000

c. $260,000

d. $300,000

e. None of the above is correct

40. Which of the following statements about partnerships is true?

a. Partnerships must file their tax returns on a calendar year basis.

b. No gain or loss is ever recognized in transactions between partners and a partnership.

c. Gain is never recognized by a partner on a contribution of property to a partnership.

d. A partner’s original basis in a partnership interest is equal to the basis of the property transferred (plus cash contributed) to the partnership, adjusted for any gain recognized on the transfer and reduced for liabilities assumed by the other partners.

e. The partnership’s basis in property contributed by a partner is equal to the fair market value of the property on the date of the transfer.