Question

On June 1, Year 3, Pete, a partner in the Sky Castle partnership, contributed to the partnership some undeveloped land (not inventory), which he had purchased on May 15, Year 1. On September 22, Year 7, Sky Castle distributed the land to Linda, who is also a partner. Linda quickly sold the land within 1 month of receipt. Linda's holding period for the land

a) Began May 15, Year 1.

b) Began June 1, Year 3.

c) Began September 22, Year 7.

d) Is short-term because she received the land from a partnership in which she is a partner.

Answer 1

Transfer of asset by partnership firm to the partner should be recorded at the date when the asset was transferred by the firm to the partner.

Here in this case sky castle partnership transfer the land to Linda on September 22, year 7. After which she sold the land within one month of receipt. So for this the holding period will starting from the day on which asset was transferred by the partnership firm i.e. September 22, year 7 till it is sold. As the period is less than 1 year it will be short term.

Therefore the answer is D ie. Is short term because she received the land from a partnership in which she is a partner.