Business, 03.03.2020 17:31 kaylaaguilar6538

Sandra contributes appreciated property (i. e., adjusted basis of $65,000 and a fair market value of $100,000) to her business entity in a transaction that qualifies for nonrecognition of gain. Sandra's ownership interest is 60 percent. The business entity later sells the appreciated property for $110,000. The property is not depreciable. Which of the following statements is correct?
a. If the entity is an S corporation, the S corporation's gross income is increased by $10,000 in the year of the sale of the property by the S corporation and Sandra's gross income is increased by $6,000 ($10,000 × 60%).

b. If the entity is a C corporation, the corporation's gross income is increased by $10,000 in the year of the sale of the property by the corporation.

c. If the entity is a partnership, Sandra's gross income is increased by $41,000 [($35,000 × 100%) + ($10,000 × 60%)] in the year of the sale of the property by the partnership.

d. All of these choices are correct.

e. None of these choices are correct.

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Sandra contributes appreciated property (i. e., adjusted basis of $65,000 and a fair market value of...

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