Question

The DJ Partnership has two? partners,Dawn and Jack.Each? partner's basis in his or her partnership interest...

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.
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Answer #1

In current distribution only gain is recognised by the partners. Gain means when cash received is more than partners basis. In the given case partners basis is 9000each. On received of cash 10000 dawn gaining 1000(10000-9000). So dawn will recognise the gain and Jack receiving 8000. He is having loss of 1000(9000-8000). The loss would not be recognised.

In case of liquidating distribution both gain and loss is recognised. So dawn will recognise 1000 gain and Jack will recognise 1000 loss.

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