40. Sam, Sue, and Shelley formed a partnership. Sam received a 50 percent intere

Question

40.            Sam, Sue, and Shelley formed a partnership. Sam received a 50 percent interest in the partnership  in exchange for land with an adjusted basis to him of $30,000 and a fair market value of $50,000.  Sue received a 25 percent interest in the partnership in exchange for $25,000 of cash.  Shelley received a 25 percent interest in the partnership in exchange for $25,000 of cash. Three years after the date of contribution, the land contributed by  Sam was sold by the partnership to an unrelated third party for $90,000. How much  gain was required to be allocated to  Sam as a result of the sale by the partnership?

a.            $20,000.

b.            $30,000.

c.            $40,000.

d.            $60,000.

Sam, Sue, and Shelley formed a partnership. Sam received a 50 percent interest in the partnership in exchange for land with an adjusted basis to him of $30,000 and a fair market value of $50,000. Sue received a 25 percent interest in the partnership in exchange for $25,000 of cash. Shelley received a 25 percent interest in the partnership in exchange for $25,000 of cash. Three years after the date of contribution, the land contributed by Sam was sold by the partnership to an unrelated third party for $90,000. How much gain was required to be allocated to Sam as a result of the sale by the partnership?

Explanation / Answer

c. $40,000.

calculated as :

Gain :sale value-Fair market value

$90,000-$50,000=$40,000

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