Khalid contributes land fair market value of $700,000; adjusted basis of $200,000) and Dan contributes $700,000 cash to form Teal Partnership.Khalid and Dan each own a 50% interest.One year later, Teal sells the land for $800,000.How much gain is recognized by each partner?
A)$600,000 to Khalid, $0 to Dan.
B)$550,000 to Khalid, $50,000 to Dan.
C)$300,000 to Khalid, $300,000 to Dan.
D)$50,000 to Khalid, $50,000 to Dan.

Question

Quizplus · Accepted Answer

Khalid's gain is $600,000 ($800,000 - $200,000). Dan's gain is $50,000 ($800,000 - $700,000).

Khalid Contributes Land Fair Market Value of $700,000; Adjusted Basis