Kudzu, Clemmons and Clancy form KCC Partnership with the following contributions
ID: 2522200 • Letter: K
Question
Kudzu, Clemmons and Clancy form KCC Partnership with the following contributions:
Partner
Contribution
Adjusted Basis
Fair Market Value
Kudzu
Land
$52,000
$50,000
Kudzu
Services
N/A
$ 5,000
Clemmons
Property
$30,000
$40,000
Clancy
Property
$25,000
$30,000
What amount of taxable income to Kudzu results from the formation of KCC?
$7,000
$2,000
$0
$5,000
Partner
Contribution
Adjusted Basis
Fair Market Value
Kudzu
Land
$52,000
$50,000
Kudzu
Services
N/A
$ 5,000
Clemmons
Property
$30,000
$40,000
Clancy
Property
$25,000
$30,000
Explanation / Answer
Answer : $5,000
Explanation : When any property is exchanged for interest in partnership , then such transaction is not a taxable event . However when service is exchanged for interest in partnership then the transaction is taxable. Therefore FMV of $5,000 received by Kudzu for service contributed to KCC is taxable.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.