Roger owns 65% of Silver Trucking, a partnership. During the current year, Roger sells a truck with an adjusted basis of $30,000 to Silver for $20,000.
I.Silver's basis in the truck is $30,000.
II.Roger can deduct the $10,000 loss on the sale of the truck.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Roger owns 65% of Silver Trucking, a partnership. During the current year, Roger sells a truck with an adjusted basis of $30,000 to Silver for $20,000.
I.Silver's basis in the truck is $30,000.
II.Roger can deduct the $10,000 loss on the sale of the truck.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Neither statement is correct. Since Roger owns 65% of Silver Trucking, he cannot sell property to the partnership at a loss, as this would be considered a disguised contribution to the partnership. Additionally, Silver's basis in the truck would be $20,000, the amount it paid for the truck, not the $30,000 adjusted basis that Roger had in the truck.

Roger Owns 65% of Silver Trucking, a Partnership