achael and Ray form an equal

partnership R&R on January 1, 20X1.

Rachael contributes $100,000 in exchange

for her one-half interest; Ray

contributes land worth $100,000. Ray's

adjusted basis in the land is $30,000.

Ray is a real estate developer, and at

the time of the contribution, the land

was inventory in his hands. The land is

a capital asset in the hands of R&R. If

R&R sells the land in 20X7 for $180,000,

a. R&R will recognize $150,000 of

capital gain.

b. R&R will recognize $150,000 of

ordinary income.

c. R&R will recognize $80,000 of

ordinary income and $70,000 of capital

gain.

d. R&R will recognize $80,000 of

ordinary income.

e. R&R will recognize $80,000 of

capital gain.