Jamahl has a 65% interest in a partnership.Jamahl sells land to the partnership for $70,000.Prior to the sale,the land had a FMV of $70,000 and an adjusted basis of $90,000 to Jamahl.Due to the sale,Jamahl will recognize
A)a gain of $20,000.
B)a loss of $20,000.
C)$0,but he will have a carryover loss of $20,000.
D)$0,and he will not have any carryover loss.

Question

Quizplus · Accepted Answer

Jamahl will not recognize any loss on the sale of land to the partnership because he owns more than 50% of the partnership, making it a related party transaction. Losses are not recognized in such transactions.

Jamahl Has a 65% Interest in a Partnership