16. Tina and Betty formed a partnership. Tina received a 40 percent interest in

Question

16.        Tina and Betty formed a partnership. Tina received a 40 percent interest in the partnership in exchange for land with an adjusted basis to her of $60,000 and a fair market value of $80,000. Betty received a 60 percent interest in the partnership in exchange for $120,000 of cash. Three years after the date of contribution, the land contributed by Tina was sold by the partnership to an unrelated third party for $90,000. How much gain was required to be allocated to Tina as a result of the sale by the partnership?

a.         $4,000

b.         $12,000

c.          $24,000

d.         $30,000

Explanation / Answer

Answer

c . 24000

the pre contribution gain allocated to tina = 80000 - 60000

= 20000

gain on sales = 90000 - 80000 = 10000

partnership interest of tina is 40 % of 10000 = 4000

the sale by patnership = 20000 + 4000

= 24000

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