Question

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?

Answer #1

a) In this problem the adjusted basis is $30,000.

When it comes to cash the adjusted basis is $25,000 and the outstide adjusted basis is $30000, so there is a loss of $5000($3000-$25000) and the FMV is also the same $25000. So in cash no gain only loss.

When it comes to property, the adjusted basis is $30000. The FMV is $50000. But as the adjusted basis is $3000, there is a gain of $20000($50000-$30000). So there is a gain interms of property.

b) Tom bais is propery is $20000. This is derived from adjusted basis minus the FMV. So that comes to $20000.

Harvey Harrison has a basis of $30,000 for his partnership
interest. He receives as a current distribution the following as
his pro rata share of the partnership assets:
Basis
FMV
Cash
$5,000
$5,000
Accounts Receivables
0
12,000
Land held for investment
10,000
13,000
Total
$15,000
$30,000
(a.) What is Harvey's gain of loss on the distribution?
(b.) What is his basis for the accounts receivable?
(c.) What is his basis for the land?
(d.) What is his basis for his...

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...

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...

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...

benny is a partner in the ben partnership. his outside basis is
$250. he receives a distribution of land worth $400 which has a
basis inside the partnership of $130
a)is the distribution taxable to Benny? if not, why not?
b)what is Benny's outside basis after the distribution?
c)assume this was a non-liquidating distribution. what is
Benny's basis in the land?
d)assume this was a liquidating distribution, what is Benny's
basis in the land after the distribution?

If the basis of a partnership interest is exhausted, a partner
can use loans made to the partnership to absorb excess
losses.
True
False
Jordan and his two brothers are equal owners in Taupe
Partnership. If Jordan sells business property (basis of $230,000;
fair market value of $280,000) to Taupe for $280,000, he
must recognize the $50,000 realized gain.
True
False
Guaranteed payments are deductible by the partnership
and are taxable to the partner receiving the payments.
True
False
Guaranteed...

At formation of partnership AB. B contributes land ($30,000 FMV
and $10,000 basis) and A contributes cash of $30,000. When the land
is sold 2 years later for $42,000, A must recognize gain of gow
much? A. $0, B. $6,000, C, $12,000, D. $42,000

19. Shaquille transfers two assets to a
newly-created corporation. The first asset has an adjusted basis of
$40,000 and an FMV of $50,000. The second asset has an adjusted
basis of $35,000 and an FMV of $25,000. Shaquille receives stock
with an FMV of $66,000 and $9,000 cash. Shaquille must recognize a
gain of
A) $4,000.
B) $5,000.
C) $6,000.
D) $7,000.
20. Chan transfers property with an adjusted
basis of $65,000 and an FMV of $70,000 to Wallis Corporation...

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...

Tom and Jerry decide to start a Limited Partnership with Tom
being the general partner and Jerry being the limited partner. Tom
contributes cash of $20,000 to the partnership and Jerry
contributes land with a basis of $20,000, fair market value of
$40,000. The land is encumbered by a recourse mortgage of $20,000.
Jerry’s basis in his partnership interest is:
a. $30,000 b. $10,000 c. $40,000 d. $0

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