Reference no: EM133076883

Question - The ABC partnership is owned by three unrelated individuals. A owns 70%, B owns 15%, and C owns 15%. A sells property with an adjusted basis of $250,000 to ABC for $150,000. The property was held by A for investment, but will be held as inventory by ABC.

1) A's recognized loss is

a) $70,000.

b) 0.

c) None of these.

d) $100,000.

2) If ABC resells the property for $450,000, the gain or loss recognized by the partnership is

a) $100,000.

b) $200,000.

c) 0.

d) $300,000.

e) None of these.

3) What amount and character of gain will be reported by A if instead he sells the property to ABC for $450,000?

a) $200,000 capital gain

b) 0

c) None of these.

d) $200,000 ordinary income