Question

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 in because this is the liquidating distribution that Partner Z is receiving (so the amount allocated has factored this in). The question is what is her gain or loss where a partner receives solely cash, unrealized receivables and inventory items (all ordinary income items) in a liquidating distribution.

Homework Answers

Answer #1

1. There is no gain or loss. The deficit between inside an outside basis is $25,000($120,000-$95,000) . The base of assets distributed to her as follows:

Beginning basis

Cash $40,000
Inventory ($30,000- $20,000($30,000/($30,000+$45,000)) $22,000
Unrealized receivables ($50,000-$5,000- $20,000($45,000/($30,000+$45,000)) $33,000

2. Her loss will ne equals to $10,000. Her outside basis of $130,000 minus the total of cash and basis of the assets distributed, $120,000. Her bases in assets distributed will be the same as I'm the hands of the partnership.

_____×_____

All the best

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
What is the tax treatment to a partner who receives a liquidating distribution assuming the partnership...
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?
Partner A received the following in a non-liquidating distribution: Basis               FMV Cash   $20,000          &nb
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?
Please explain step by step the liquidating distribution below: problem Carlos receives a proportionate liquidating distribution...
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
Simon is a 30 percent partner in the SBD Partnership, a calendar year-end entity. As of...
Simon is a 30 percent partner in the SBD Partnership, a calendar year-end entity. As of the end of this year, Simon has an outside basis in his interest in SBD of $188,000, which includes his share of the $60,000 of partnership liabilities. On December 31, SBD makes a proportionate distribution of the following assets to Simon: Tax Basis FMV Cash $ 40,000 $ 40,000 Inventory 55,000 65,000 Land 30,000 45,000 Totals $ 125,000 $ 150,000 a1. What are the...
David’s basis in the Jimsoo Partnership is $55,000. In a proportionate liquidating distribution, David receives cash...
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...
The WXYZ partnership has the two assets shown in table before its liquidating distribution to partner...
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
Madison is a 35% partner in the Total Partnership, a calendar-year-end entity. Madison has an outside...
Madison is a 35% partner in the Total Partnership, a calendar-year-end entity. Madison has an outside basis in his interest in Total Partnership of $198,000, which includes his share of the $45,000 of partnership liabilities. On December 31, Total makes a proportionate distribution of the following assets to Madison: BASIS FMV Cash $50,000 $50,000 Inventory $65,000 $75,000 Land $50,000 $65,000 Totals $165,000 $180,000 For an operating distribution, outline the tax consequences (amount and character of recognized gain or loss, basis...
Assume a partnership makes a distribution of inventory to an 80% owner. The partnership purchased the...
Assume a partnership makes a distribution of inventory to an 80% owner. The partnership purchased the inventory for $500,000. At the time of the distribution, the inventory has a FMV of $200,000. The partner’s outside basis is $440,000. a. What is the tax result to the partnership and the partner on this distribution if it were a non-liquidating distribution? There is no gain or loss recognized by the partnership or partner. b. What is the tax result to the partnership...
Tom is a partner in TXY partnership. His adjusted basis in the partnership is $30,000. During...
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?
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT