Question

Please explain the difference

1. Under which of the following circumstances will a partner recognize a gain from a non-liquidating distribution?

a. A partner will never recognize a gain from a non-liquidating distribution.

b. A partner will recognize a gain from a non-liquidating distribution when the partnership distributes property other than money with an inside basis greater than the partner's basis in the partnership interest.

c. A partner will recognize a gain from a non-liquidating distribution when the partnership distributes money in an amount that is less than the partner's basis in the partnership interest.

d. A partner will recognize a gain from a non-liquidating distribution when the partnership distributes money in an amount that is greater than the partner's basis in the partnership interest.

2 Under which of the following circumstances will a partner recognize a loss from a non-liquidating distribution?

a. A partner will never recognize a loss from a non-liquidating distribution.

b. A partner will recognize a loss from a non-liquidating distribution when the partnership distributes property other than money with an inside basis greater than the partner's basis in the partnership interest.

c. A partner will recognize a loss from a non-liquidating distribution when the partnership distributes money in an amount that is less than the partner's basis in the partnership interest.

d. A partner will recognize a loss from a non-liquidating distribution when the partnership distributes money in an amount that is greater than the partner's basis in the partnership interest.

Answer #1

**Answer - 1) Option D.** A partner will recognize
a gain from a non-liquidating distribution when the partnership
distributes money in an amount that is greater than the partner's
basis in the partnership interest.

**Answer -2) Option A.** A partner will never
recognize a loss from a non-liquidating distribution.

**Explanation - As per Sec 731(b)** Generally,
Partnership does not recognize gains or losses from proportionate
non-liquidating distribution. However, Gain is recognized by the
distributee partner if cash received exceeds the partner's outside
basis in the partnership immediately before the distribution. And a
partner who receives non-liquidating cannot recognize a loss.

Liquidations:
Determine whether the following statements are True or
False:
TRUE FALSE
1. A liquidating cash distribution may reduce the recipient
partner's basis below zero.
2. A liquidating distribution of appreciated inventory reduces the
recipient partner's basis in his partnership interest to below
zero.
3. If a partner...

Question-2
Susan is a Partner in a business which publishes college
textbooks. When would Susan recognize gain on a partnership
distribution?
A. In a liquidating distribution when the fair market value of
the property received exceeds partnership interest basis.
B. In a nonliquidating distribution and the cash received
exceeds the basis of the partnership interest.
C. In a nonliquidating distribution and the property received
exceeds the fair market value of the partnership interest.
D. Gain is not recognized until the...

The DJ Partnership has two? partners,Dawn and Jack.Each?
partner's basis in his or her partnership interest is $9,000 before
any distribution. The partnership distributes $10,000 cash to Dawn
and $8,000 cash to Jack.
Requirements
a.
Assuming a current? distribution, determine for each partner?
(1) gain or loss recognized and? (2) basis in the partnership
interest after the distribution.
b.
Assuming a liquidating? distribution, determine each? partner's
gain or loss recognized.

Partnerships
Determine whether the following statements are True or
False:
TRUE FALSE
1. Guaranteed payments to partners do not reduce the ordinary
income of the partnership.
2. Non recourse borrowing of a partnership increases threat risk
basis of each partner in interest in the partnership.
3. Tax exempt interest income decreases the basis of...

Lucas is a 25% partner in the LCS Partnership. On January 1, LCS
distributes $40,000 cash and land with a $32,000 fair value (inside
basis $16,000). LCS has no liabilities at the date of the
distribution. Lucas’ basis in LCS is $32,000. What is the amount
and character of Lucas’ gain or loss on the liquidating
distribution?
Multiple Choice $0. $8,000 capital gain. $24,000 capital gain.
$40,000 capital gain.

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...

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...

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...

49-Pettifog Partnership distributes cash of $20,000, hot assets
worth $5,000, and a parcel of land in a liquidating distribution to
Li, a partner. The hot assets have a basis of $0 to the
partnership. The land has a fair market value of $80,000 and an
inside basis of $55,000. Li’s outside basis in Pettifog just prior
to the distribution is $85,000. What amount of gain or loss, if
any, must Li recognize and what is Li’s resulting basis in the...

Problem 11-26 (c) (LO. 2)
When Abe's outside basis in the Vacuna Partnership is $211,000,
the partnership distributes to him $36,000 cash, three accounts
receivable (fair market value of $61,000, inside basis to the
partnership of $0), and a parcel of land (fair market value of
$484,000, inside basis to the partnership of $420,000). Abe remains
a partner in the partnership, and the distribution is proportionate
to the partners.
If an amount is zero, enter "0".
a. Does the partnership...

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