David contributes investment land with a basis of $24,000 and an FMV of $40,000 to a partnership for a 10% interest in partnership capital, profits, and losses. The land is subject to a $30,000 recourse liability, which is assumed by the partnership. The partnership has other recourse liabilities of $18,000. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. David must recognize a
A)$3,000 capital gain.
B)$3,000 capital loss.
C)$1,200 capital gain.
D)$1,200 capital loss.

Question

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The Answer of David contributes investment land with a basis of $24,000 and an FMV of $40,000 to a partnership for a 10% interest in partnership capital, profits, and losses. The land is subject to a $30,000 recourse liability, which is assumed by the partnership. The partnership has other recourse liabilities of $18,000. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. David must recognize a
A)$3,000 capital gain.
B)$3,000 capital loss.
C)$1,200 capital gain.
D)$1,200 capital loss.

David Contributes Investment Land with a Basis of $24,000 and an FMV