Question

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 has a basis of $15,000 in a partnership, and
receives a non liquidating distribution of land with an adjusted
basis of $16,000, but a FMV of $18,000, there will be a gain of
$1,000.

4. A non liquidating distribution of only cash, may result in a
deductible loss.

5. A liquidating distribution of only land, may result in a
deductible loss.

6. In a nonliquidating distribution of property, the partner's
basis must equal zero.

7. In a nonliquidating distribution, if there is sufficient basis
to the partner, the property received will have the same basis to
the partner as the property had to the partnership.

8. A partner recognizes a gain on a distribution only to the extent
that cash received exceeds the partner's basis in the
partnership.

9. Loss is recognized by the partner who receives a
nonliquidating distribution of cash, when the amount of
cash is less than his basis in the partnership interest before the
distribution.

10. If a partner has a basis of $15,000 in a partnership, and
receives a nonliquidating distribution of land with an adjusted
basis of $16,000, but a FMV of $18,000, the land will have a basis
of $15,000.

Answer #1

1. partner`s adjusted basis in his/ her partnership interest is decreased ( but not below zero ) by money and adjusting basis of property distributed to the partner , hence statement is false.

2. liquidating distribution of appreciated inventory reduces recepient partners basis in his partnership interest but not below zero. hence statement is false.

3. true, gain = 15000 - 16000 = 1000.

4. true, a non liquidating distribution only in cash may result in deductible loss.

5. false , loss or gain may not be recongised at time of distribution.

6. false , partner`s interest is reduced ( but not below zero ) by liabilities.

7. true

8.true , recognizes a gain on a distribution only to extent that cash received exceeds the partner`s basis in the partnership.

9. true

10. false land will have a basis of 16000 dollars.

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...

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...

2 . Identify which of the following statements is true:
If an S Corporation has no accumulated earnings and profits, the
amount distributed to a shareholder will not increase the
shareholder's basis in the stock
If a C Corporation does not distribute its income to its
shareholders, double taxation of the income will occur.
C Corporation operating losses are deductible by the individual
shareholders
S Corporation operating losses are never deductible by the
individual...

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...

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?

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...

Please explain step by step the liquidating distribution below:
problem Carlos receives a proportionate liquidating distribution
consisting of $8000 cash and inventory with a basis to the
partnership of $5,000 and a FMV of $6000. His basis in his
partnership interest was $15,000 immediately before the
distribution. Carlos assigns a basis of $7,000 to the inventory,
and recognizes no gain or loss. True/False

Partner A received the following in a non-liquidating
distribution:
Basis FMV
Cash
$20,000 $20,000
Inventory Item
1 $15,000 $18,000
Inventory Item
2 $12,000 $4,000
Capital Asset
1 $15,000
$8,000
Capital Asset 2 $10,000 $20,000
$72,000 $70,000
Assume A’s basis in the partnership before the distribution was
$35,000. What would the bases of the assets be to A?

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.

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...

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