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Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for...

Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for a 10% partnership interest. Yong had taken $10,000 of depreciation prior to the contribution. The partnership has no liabilities. As a result of the contribution, Yong must recognize...? Please show your work.

no gain or loss.

a $5,000 Sec. 1245 gain.

a $5,000 capital gain.

$10,000 ordinary income.
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Answer #1

NO gain or loss

Yong Corporation

Particulars

Adjusted Basis :20000

FMV :25000

Partnership Interest :10%

Depreciation :10000$

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