What is the tax consequence of the exchange

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Question: Two Sisters is a partnership that owns and operates a farm. During the current year, the partnership raised and harvested hay at a cost of $20,000. It then traded half the hay for quarter horse breeding stock-young horses worth $30,000. Two Sisters fed the remainder of the hay to the horses, which were worth $50,000 at the end of the year.

a. What is the tax consequence of the exchange? A realized and recognized gain of $

b.What amount can they deduct as current operating expenses from these transactions during the current year? $

c.What is the basis of the horses at year-end? $

d.The partnership has income of $ from these transactions during the current year.

Reference no: EM131538267

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