Question

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?

Answer #1

The gains and losses are to be recognized from the liquidating distribution only when the cash and the ordinary income assets under section 751 are received as a part of the distribution. Thus in this case, partner is receiving the capital asset hence no gain or loss will be recognized for the partner.

Cash basis after distribution remains equal to the fair value= $10000

Capital asset basis= 30000-10000+10000= 30000

Section 734 adjustment = 50000-40000= 10000

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...

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

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.

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...

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...

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

As of the end of the current tax
year, Valerie Fleming’s tax basis in her partnership interest was
$45,000. At that time she received a $60,000
non-liquidating cash distribution. Assume that all other
partners also received proportionate cash distributions, so that
the provisions of §751(b) do not apply to the distribution.
Immediately following the distribution, the partnership had the
following assets:
Basis
FMV
Cash
$ 10,000 $
10,000
Accounts
Receivable
0
45,000
Depreciable
Equipment
50,000
80,000
Land (§1231
Asset) ...

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 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?

In a distribution, T, one third partner, receives $6000 in cash
and capital assets of $9000. The total assets of the partnership
consist of cash of $9000 and capital assets of $36,00. Which of the
following statements is true regarding partner T if the basis in
T's partnership interest is $14,000? A. T has received a
disproportionate distribution B T must report a capital gain of
$1000 C. T must report an ordinary loss of $1000 or D. There is...

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