Question

Disproportionate distribution can occur in which of the following situations? A partnership has 100 % capital...

Disproportionate distribution can occur in which of the following situations?
A partnership has 100 % capital assets
The partnership only owns inventory
The partnership has 100% ordinary assets
The partnership has a combination of ordinary and capital sssets

Homework Answers

Answer #1

ANSWER - The partnership has a combination of ordinary and capital assets.

Explanation :- Section 751(b) was designed for distribution transactions that affect the percentage ownership of ordinary income property. This provision is intended to ensure that gain inherent in ordinary assets will be taxed as ordinary income. Thus, the purpose of Section 751(b) is to prevent:

  1. the conversion of partnership ordinary income into capital gain, and

  2. the shifting among partners of ordinary income property.
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In a distribution, T, one third partner, receives $6000 in cash and capital assets of $9000....
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...
Partner Z of the XYZ partnership receives a liquidating distribution of the following: Basis                           
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...
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...
The RST Partnership makes a pro rata distribution of its assets to R in complete liquidation...
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...
Gerard has a 60% interest in the capital and profits of Sly Partnership. He also owns...
Gerard has a 60% interest in the capital and profits of Sly Partnership. He also owns a 65% interest in the capital and profits of Brice Partnership. On February 5, 2014, Sly Partnership sold land to Brice Partnership for $35,000. At the time of the sale, the land had an adjusted basis to Sly Partnership of $40,000. What is the amount of loss that Sly Partnership can recognize in 2014?
Which of the following statements is always correct regarding assets acquired by a newly-formed partnership? If...
Which of the following statements is always correct regarding assets acquired by a newly-formed partnership? If a partner contributes: a.         Equipment that is depreciable trade or business property (in the partner’s hands): the partnership treats the property as new property, and may claim a § 179 deduction. b.         Unrealized (in the cash-basis partner’s hands) receivables: the partnership will report ordinary income when the receivable is collected. c.         Inventory (in the partner’s hands): the partnership reports ordinary income whenever the property...
9. Final distribution of partnership cash in made in according to what rule: a. partner with...
9. Final distribution of partnership cash in made in according to what rule: a. partner with highest capital balance paid first b. partner who joined the partnership earliest is paid first c. partner who worked the hardest is paid first d. partners are paid in proportion to original profit and loss percentages e. partners are paid in proportion to final capital balances 10. Which is true about obligations due to partnership creditors in a liquidation of a partnership. a. partnership...
Ruth invested $100,000 in the Doing Great partnership. The partnership is now being liquidated and Ruth...
Ruth invested $100,000 in the Doing Great partnership. The partnership is now being liquidated and Ruth has a deficit balance of $30,000. Which of the following statement is true? Ruth responsibility and loss is constrained to the original $100,000 investment. Ruth is responsible to pay the partnership additional $30,000, even if she would need to sell her personal assets in order to afford this payment. Ruth should cover her deficit only if she can easily afford it. Ruth is legally...
Liquidation schedule—one negative capital account with no capital contribution The ABC partnership reports the following condensed...
Liquidation schedule—one negative capital account with no capital contribution The ABC partnership reports the following condensed balance sheet: Cash $580,000 Liabilities $800,000 Noncash assets 1,200,000 Partner A, capital 450,000 Partner B, capital 450,000 Partner C, capital 80,000 Total assets $1,780,000 Total liabilities and partner capital $1,780,000 The partners wish to liquidate the partnership. The noncash assets are sold for $900,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The...
The Calvin-Dogwood Partnership owns inventory that was purchased for $65,800, has a current replacement cost of...
The Calvin-Dogwood Partnership owns inventory that was purchased for $65,800, has a current replacement cost of $58,900, and is priced to sell for $93,600. At what amount should the inventory be recorded in the accounts of the new partnership if Alexis is to be admitted? a.$65,800 b.$34,700 c.$58,900 d.$93,600 2) The balance sheet of Morgan and Rockwell was as follows immediately prior to the partnership's liquidation: cash, $22,300; other assets, $144,000; liabilities, $41,100; Morgan, capital, $60,100; Rockwell, capital, $65,100. The...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT