Question

The RST Partnership makes a pro rata distribution of its assets to R in complete liquidation of R's partnership interest. The distribution consist of $20,000 in cash and capital assets with a basis to the partnership of $15,000 and a faor ,arlet va;ie pf $30,000. At the time of the distribution, R's partnership basis is $40,000, which is what she paid for the interest one year earlier. If the partnership has no Section 754 election in effect what is R's basis in the property distributed? A If no Section 732 (d) adjustment is made, R's basis in the capital assets is $15,000 B. If no Section 732(d) adjustment is made, R's basis in the capital assets is $20,000. C. If no Section 732(d) adjustment is made, R's basis in the capital assets is $35,000. D. If no Section 732(d) adjustment is made, R's basis in the capital assets is $40,000.

Answer #1

**ANSWER:**** **

*The correct option is d.) No gain or loss and decreases the
basis of its remaining assets by $40,000.*

In complete liquidation of partner's interest, the distribution of money in excess of partnership basis is to be recognised as gain or loss otherwise no gain or loss is recognized and the basis to a partner of property distributed in kind is equal to adjusted basis of the partner's interest reduced by any cash distributed to the partner in the same transaction.

Therefore in the given case the money distributed is $40,000 which is less than the partnership basis of $150,000, thus there will be no gain or loss. The adjusted basis of capital asset is to be reduced by cash received of $40,000.

**Thus the basis of remaining assets will be decreased by
$40,000**

X-Co. adopts a plan of complete liquidation and makes the
following pro rata distributions to its shareholders (assume all
are individuals): (A) Cash: $70,000; (B) Inventory: FMV $20,000
Basis $20,000 Mortgage $10,000; (C) Inventory: FMV $30,000 Basis
$15,000 Mortgage $40,000; (D) Capital Asset: FMV $500 Basis $2,800;
(Assume that X Co. acquired the property distributed to D in a Sec.
351 transfer 6 months before adopting the plan of liquidation when
the FMV of the property was $800 and X...

X-Co. adopts a plan of complete liquidation and makes the
following pro rata distributions to its shareholders (assume all
are individuals): (A) Cash: $70,000; (B) Inventory: FMV $20,000
Basis $20,000 Mortgage $10,000; (C) Inventory: FMV $30,000 Basis
$15,000 Mortgage $40,000; (D) Capital Asset: FMV $500 Basis $2,800;
(Assume that X Co. acquired the property distributed to D in a Sec.
351 transfer 6 months before adopting the plan of liquidation when
the FMV of the property was $800 and X...

What is the tax treatment to a partner who receives a
liquidating distribution assuming the partnership has made a
Section 754 election. The distribution was cash of $10,000 and
capital assets of $30,000. The partner's basis before the
distribution was $50,000. What is the gain or loss for the partner,
the cash basis after the distribution, capital assets basis, and
Section 734 Adjustment?

The WXYZ partnership has the two assets shown in table before
its liquidating distribution to partner W. If partner W with a
$3,000 basis in her 25% interest receives $10,000 of capital
assets, what basis will W have in the capital assets as a result of
the liquidation?
Assets
Basis Value
Accounts
Receivable
$0
$20,000
capital
assets
12,000 20,000
Total
$12,000 $40,000

1. In complete liquidation of her interest in
the Buyers Partnership, Sarah received a cash distribution of
$40,000. Her basis in the partnership interest prior to receipt of
the liquidating distribution was $48,000.
a). How much gain or loss must Sarah recognize on
receipt of the liquidating distribution? b).
Assume that Sarah received cash of only $25,000, and property worth
$15,000 in complete liquidation of her interest in
the partnership. How much gain or loss would she recognize? What
would...

The Jerome Ave. Deli Partnership had assets worth $50,000 after
liquidation. Peter, Gerard, and Harry, equal partners, each
contributed $6,000 into the capital pool at the inception of the
business. Gerard later loaned the business $15,000. They owe
$29,000 to creditors. What will Gerard get in distribution,
assuming there is no agreement on the distribution of profits?
a.
$17,000
b.
$21,000
c.
$15,000
d.
$6,000

Hs
$30000 partnership interest is terminated through a capatial asset
distribution having a fair market value of $50000 ( partnership
basis of $40000) cash of $10000. Assuming that an optional basis
adjustment election is in effect which of the following statement
is true?
A Hs basis in the capital asset is $20000
B H does not recognize gain or loss and takes a $30000
basis
C Hreconized a gain of $30000
D The partnership increases the basis of its remaining...

9. Final distribution of partnership cash in made in according
to what rule:
a. partner with highest capital balance paid first
b. partner who joined the partnership earliest is paid first
c. partner who worked the hardest is paid first
d. partners are paid in proportion to original profit and loss
percentages
e. partners are paid in proportion to final capital balances
10. Which is true about obligations due to partnership creditors
in a liquidation of a partnership.
a. partnership...

6) The Hylands Hotels are liquidating their
partnership. Before selling the assets and paying liabilities, the
capital balances for the partners are: Martha $45,000; Nathan
$36,000 and Orin $26,000. The profit and loss sharing ratio has
been 2:2:1 for Martha, Nathan and Orin respectively. The
partnership has cash $68,000, $75,000 noncash assets and
$36,000Accounts payable.
6a. Assume the partnership sells the non-cash
assets and received $84,000 in cash.
6b. Assume the partnership sells the noncash
assets and received $35,000.
Instructions...

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