Question

Simon is a 30 percent partner in the SBD Partnership, a calendar year-end entity. As of...

Simon is a 30 percent partner in the SBD Partnership, a calendar year-end entity. As of the end of this year, Simon has an outside basis in his interest in SBD of $188,000, which includes his share of the $60,000 of partnership liabilities. On December 31, SBD makes a proportionate distribution of the following assets to Simon:

Tax Basis FMV
Cash $ 40,000 $ 40,000
Inventory 55,000 65,000
Land 30,000 45,000
Totals $ 125,000 $ 150,000

  1. a1. What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is an operating distribution?

  2. a2. What are the tax consequences (basis in distributed assets) of the distribution to Simon if the distribution is an operating distribution?

  3. b1. What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is a liquidating distribution?

  4. b2. What are the tax consequences (basis in distributed assets after allocation) of the distribution to Simon if the distribution is a liquidating distribution?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1


0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Madison is a 35% partner in the Total Partnership, a calendar-year-end entity. Madison has an outside...
Madison is a 35% partner in the Total Partnership, a calendar-year-end entity. Madison has an outside basis in his interest in Total Partnership of $198,000, which includes his share of the $45,000 of partnership liabilities. On December 31, Total makes a proportionate distribution of the following assets to Madison: BASIS FMV Cash $50,000 $50,000 Inventory $65,000 $75,000 Land $50,000 $65,000 Totals $165,000 $180,000 For an operating distribution, outline the tax consequences (amount and character of recognized gain or loss, basis...
Grace, James, Helen, and Charles each own equal interests in GJHC Partnership, a calendar year-end, cash-method...
Grace, James, Helen, and Charles each own equal interests in GJHC Partnership, a calendar year-end, cash-method entity. On January 1 of the current year, James’s basis in his partnership interest is $62,000. For the taxable year, the partnership generates $80,000 of ordinary income and $30,000 of dividend income. For the first five months of the year, GJHC generates $25,000 of ordinary income and no dividend income. On June 1, James sells his partnership interest to Robert for a cash payment...
Partner Z of the XYZ partnership receives a liquidating distribution of the following: Basis                           
Partner Z of the XYZ partnership receives a liquidating distribution of the following: Basis                                  FMV Cash $40,000                       $40,000 Inventory $30,000                       $45,000 Unrealized receiv. $50,000                       $45,000 1. Z’s basis in her partnership interest was $95,000. What is her gain or loss and the bases of the assets distributed to her? 2. Assume Z’s basis in her partnership interest was $130,000. What is her gain or loss and the bases of the assets distributed to her? The capital percentages are already factored...
David’s basis in the Jimsoo Partnership is $55,000. In a proportionate liquidating distribution, David receives cash...
David’s basis in the Jimsoo Partnership is $55,000. In a proportionate liquidating distribution, David receives cash of $7,400 and two capital assets: (1) land 1 with a fair market value of $20,800 and a basis to Jimsoo of $16,600, and (2) land 2 with a fair market value of $10,300 and a basis to Jimsoo of $16,600. Jimsoo has no liabilities. c1. If the two parcels of land had been inventory to Jimsoo, what are the tax consequences to David...
Partner N of the LMN partnership receives a liquidating distribution of the following: Basis                           
Partner N of the LMN partnership receives a liquidating distribution of the following: Basis                            FMV Cash   $50,000                       $50,000 Inventory                    $35,000                       $45,000 Unrealized Receiv.    $75,000                       $53,000 Land    $30,000                       $45,000 N’s basis in her partnership interest was $275,000. What is her gain or loss and the bases of the assets distributed to her?
Assume a partnership makes a distribution of inventory to an 80% owner. The partnership purchased the...
Assume a partnership makes a distribution of inventory to an 80% owner. The partnership purchased the inventory for $500,000. At the time of the distribution, the inventory has a FMV of $200,000. The partner’s outside basis is $440,000. a. What is the tax result to the partnership and the partner on this distribution if it were a non-liquidating distribution? There is no gain or loss recognized by the partnership or partner. b. What is the tax result to the partnership...
Kristen and Harrison are equal partners in the KH Partnership. The partners formed the partnership five...
Kristen and Harrison are equal partners in the KH Partnership. The partners formed the partnership five years ago by contributing cash. Prior to any distributions Harrison has a basis in his partnership interest of $28,500. On December 31, KH makes a proportionate operating distribution of $41,500 cash to Harrison. What is the amount and character of Harrison's recognized gain or loss and what is his remaining basis in KH? Multiple Choice $0 gain, $0 basis. $13,000 capital gain, $0 basis....
Tom is a partner in TXY partnership. His adjusted basis in the partnership is $30,000. During...
Tom is a partner in TXY partnership. His adjusted basis in the partnership is $30,000. During the year, he receives the following distributions:                                                             AB                              FMV Cash                                                    $25,000                       $25,000 Property                                              $25,000                       $50,000. These are non-liquidating, proportionate, pro-rata distributions. a. What gain, if any, must Tom recognize on these distributions? b. What is Tom’s basis in the property?
1. Wilma Clay and Nathan are equal partners in the cousins partnership. At the end of...
1. Wilma Clay and Nathan are equal partners in the cousins partnership. At the end of the year, Wilma's tax basis in her partnership interest was $14,000, clay's basis was $25,000 and Nathan’s basis $8,000. In a non-liquidating distribution, the partnership distributed investment property to Clay with a tax basis of $18,000 and a fair market value of $45,000. a)How much gain must Clay recognize on receipt of the distribution? b) What basis will he take ii the property received...
Marco, Jaclyn, and Carrie formed Daxing Partnership (a calendar year-end entity) by contributing cash 10 years...
Marco, Jaclyn, and Carrie formed Daxing Partnership (a calendar year-end entity) by contributing cash 10 years ago. Each partner owns an equal interest in the partnership and has an outside basis in his/her partnership interest of $104,000. On January 1 of the current year, Marco sells his partnership interest to Ryan for a cash payment of $137,000. The partnership has the following assets and no liabilities as of the sale date: Tax Basis FMV Cash $ 18,000 $ 18,000 Accounts...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT