TAX ACCOUNTING 2020

1) On January 1, Doris and Ellen form a two-member equal partnership with a total capital of $30,000. Doris contributes $15,000 cash, and Ellen contributes depreciable property. It has at time of contribution a remaining life of five years, an adjusted basis to Ellen of $1,000, and a fair market value of $15,000. They agree that the property will be depreciated straight-line over five years and that Doris may claim the maximum depreciation deduction. For the current year Doris may claim depreciation of:

a. $200 b. $1,000 c. $1,500 d. $3,000

2) Albert contributes $30,000 cash upon the formation of Corporation X. Bentley contributes property with a fair market value of $30,000 and an adjusted basis of $20,000 upon the formation of X. Charles contributes $5,000 cash and $35,000 worth of services upon the formation of X. How much income must Bentley and Charles recognize respectively as a result of the formation of X?

a. $0 Bentley; $35,000 Charles b. $0 Bentley; $5,000 Charles c. $10,000 Bentley; $0 Charles d. $10,000 Bentley; $35,000 Charles