For each question on, you should assume that:

* unless expressly stated to the contrary, all events occurred in the current taxable year;

* all persons are United States citizens;

* there is no tax avoidance purpose for any transaction, and that with respect to any mortgage on any property, there was a bona fide business purpose for incurring or assuming the debt;

* unless expressly stated to the contrary, the partnership has no hot assets, has no debts or other liabilities, and does not have a Section 754 election in effect;

* each partnership is a general partnership;

* there are no special allocation provisions contained in any partnership agreement; and

* unless expressly stated to the contrary, or the context of the questions requires a conclusion that the distribution was not pro rata - such as the liquidation of the interest of just one partner, all partnership distributions were pro rata.

16. Tina and Betty formed a partnership. Tina received a 40 percent interest in the partnership in exchange for land with an adjusted basis to her of $60,000 and a fair market value of $80,000. Betty received a 60 percent interest in the partnership in exchange for $120,000 of cash. Three years after the date of contribution, the land contributed by Tina was sold by the partnership to an unrelated third party for $90,000. How much gain was required to be allocated to Tina as a result of the sale by the partnership?

a. $4,000

b. $12,000

c. $24,000

d. $30,000

17. When inventory that was contributed to a partnership in exchange for a partnership interest is eventually sold by the partnership, how will the character of the income or loss be determined?

a. The character of any income or loss will be ordinary regardless of when the contributed property is sold by the partnership and regardless of the character of the asset in the hands of the partnership.

b. The character of any income or loss will be ordinary if the contributed property is sold by the partnership within five years after the date of contribution regardless of the character of the asset in the hands of the partnership.

c. The character of any income or loss will be based on the character of the asset in the hands of the partnership regardless of when the contributed property is sold by the partnership.

d. The character of any income or loss will be ordinary to the extent of the contributing partners built-in gain or loss in the property at the time of the contribution regardless of when the contributed property is sold, and any balance will based on the character of the asset in the hands of the partnership.

18. Barbara and Bill formed an equal partnership, B&B, a general partnership, on January 1, 2014. Barbara contributed $100,000 in exchange for her one-half interest. Bill contributed land worth $100,000 that had an adjusted basis to him of $30,000 in exchange for his one-half interest. Which of the following statements is accurate with respect to this transaction?

a. None of Barbara, Bill, or B&B recognized any gain or loss.

b. Bill recognized gain of $70,000 , but Barbara and B&B did not recognize any gain or loss.

c. B&B recognized gain of $70,000 , but Barbara and Bill did not recognize any gain or loss.

d. Bill and B&B each recognized $70,000 of gain, but Barbara did not recognize any gain or loss.