TEC Partners was formed during the current tax year. It incurred $10,000 of organizational expenses, $80,000 of startup expenses, and $5,000 of transfer taxes to retitle property contributed by a partner. The property had been held as MACRS property for ten years by the contributing partner, and had an adjusted basis to the partner of $300,000 and fair market value of $400,000. Which of the following statements is correct regarding these items? a. TEC's deducts the first $5,000 of startup expenses and amortizes the remainder over 180 months. b. TEC treats the contributed property as a new MACRS asset placed in service on the date the property title is transferred. c. TEC must capitalize the transfer tax and treat it as a new asset placed in service on the date the property is contributed. d. TEC must amortize the $10,000 of organizational expenses over 180 months. e. None of these statements are true.

Question

Marco Mccullough

Business

12 January, 06:19

TEC Partners was formed during the current tax year. It incurred $10,000 of organizational expenses, $80,000 of startup expenses, and $5,000 of transfer taxes to retitle property contributed by a partner. The property had been held as MACRS property for ten years by the contributing partner, and had an adjusted basis to the partner of $300,000 and fair market value of $400,000. Which of the following statements is correct regarding these items? a. TEC's deducts the first $5,000 of startup expenses and amortizes the remainder over 180 months. b. TEC treats the contributed property as a new MACRS asset placed in service on the date the property title is transferred. c. TEC must capitalize the transfer tax and treat it as a new asset placed in service on the date the property is contributed. d. TEC must amortize the $10,000 of organizational expenses over 180 months. e. None of these statements are true.

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Answers (1)

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Javion Hickman · Answer 1

C. Tec must capitalize the transer tax and treat it as a ney asset placed in service on the date the property is contributed.

Explanation:

A. - Is incorrecto because none of the start espenses can be deducted if the total incurred exceeds $55,000

B. - is incorrect because the partnership steps into the partner's shoes with respecto to depreciation of contributed probperty.

d. - Is incorrect because the first $5000 of organizational costs may be deducted if total organizational costs are less than $50,000.