Henry is a 50% partner in HJ Partnership. For 2015, the tax form he receives from HJ (Schedule K-1 of Form 1065 shows business income of $40,000. During 2015, Henry received a $10,000 distribution from HJ.

a. How much must Henry report on his Form 1040 from HJ for 2015? $30,000

b. How would your answer change if HJ were instead an S corporation?

Roscoe contributes a personal use asset with an adjusted basis of $15,000 and a fair market value of $28,000 on the contribution date. Determine if any gain or loss is recognized and the basis under the following circumstances.

a. Roscoe contributes the asset to a sole proprietorship.

b. Roscoe contributes the asset to a partnership for 10% interest.

c. Roscoe contributes the asset to a corporation for 25% interest. (Assume 351 control requirement is satisfied.)