Exam Question 14 of 35 Select the best answer. Partner V is a one-fourth partner

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Exam Question 14 of 35 Select the best answer. Partner V is a one-fourth partner in a partnership with $12,000 of accounts receivable with a zero basis, capital assets of $16,000 with an $8,000 basis, and no liabilities. If partner V receives $7,000 of accounts receivable from the partnership in exchange for his entire interest, which of the following is deemed to occur? O A. Partner V need not recognize any gain or loss. O B. Partner V must recognize a capital gain of $2,000 C. Partner V must recognize ordinary income of $3,000 O D. Partner V must recognize a capital gain of $5,000 am, Question Q 14 100% Complete Exit & R

Explanation / Answer

1)

Hot Assets = $12000 * (1/4)

= $3000

if Basis is $0,

So Ordinary Income is $3000

The Answer is "C"

C. Partner V must recognize Ordinary income of $3000

2) P's Capital Account Balance :-

The answer is "B"

B. $105000.

Particulars Amount($) P's Invest in PQR 60000 Add : Income 120000 Less : Withdrawn / Drawings (75000) P's Capital Account Balance 105000

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