Question

**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 from the partnership?

c) What will be his remaining basis in the partnership interest?

**2.** Wayne, a one-third partner in the Count’em
partnership, received investment property worth $100,000 in
redemption (i.e, partial liquidation) of half his interest. The
partnership’s tax basis in the investment property was $48,000.
Wayne’s tax basis in his partnership interest prior to the
distribution was $40,000.

a) Will Wayne be required to recognize any gain or loss on receipt of the distribution from the partnership?

b) What will be his tax basis in the property received?

c) What will be his remaining basis in his partnership interest?

Answer #1

1.

Wilma | Clay | Nathan | |

basis | 14000 | 25000 | 8000 |

tax basis | 18000 | ||

fair market value | 45000 |

a. Clay must recognise no gain on receipt of distribution

b. Clay will take the basis of 18000 for the property received from the partnership

c. His remaining basis in the partnership interest wil be 0

2. a. No, Wayne will not be required to recognize any gain or loss on receipt of the distribution from the partnership until he sells his interest. After that, he will be required to recognise a gain of $8,000 (48000-40000).

b. His tax basis in the property received will be $40,000

c. His remaining basis in his partnership interest will be 0

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...

ustin and Lauren are equal partners in the PJenn Partnership.
The partners formed the partnership seven years ago by contributing
cash. Prior to any distributions, the partners have the following
bases in their partnership interests: (Leave no answer
blank. Enter zero if appplicable.)
Partner
Outside Basis
Justin
$
24,625
Lauren
$
24,625
On December 31 of the current year, the partnership makes a pro
rata operating distribution of:
Partner
Distribution
Justin
Cash
$
28,375
Lauren
Cash
$
20,250
Property
$...

Kristen and Harrison are equal partners in the KH Partnership.
The partners formed the partnership five years ago by contributing
cash. Prior to any distributions Harrison has a basis in his
partnership interest of $28,500. On December 31, KH makes a
proportionate operating distribution of $41,500 cash to Harrison.
What is the amount and character of Harrison's recognized gain or
loss and what is his remaining basis in KH?
Multiple Choice
$0 gain, $0 basis.
$13,000 capital gain, $0 basis....

Partners A and B form a partnership where each receive a 50%
interest in capital and profits. Partner A contributes cash of
$25,000 and land valued at $25,000. Partner A has a basis in the
land of $20,000 and has held it for two years. Partner B
contributes equipment (with a basis to B of $15,000 and a fair
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Partners A and B form a partnership where each receive a 50%
interest in capital and profits. Partner A contributes cash of
$25,000 and land valued at $25,000. Partner A has a basis in the
land of $20,000 and has held it for two years. Partner B
contributes equipment (with a basis to B of $15,000 and a fair
market value of $30,000) and inventory (with a basis to B of
$10,000 and a fair market value of $20,000). Partner...

Adam and Alyssa are equal partners in the PartiPilo Partnership.
The partners formed the partnership three years ago by contributing
cash. Prior to any distributions, the partners have the following
bases in their partnership interests: (Leave no answer
blank. Enter zero if applicable.)
Partner
Outside Basis
Adam
$
14,300
Alyssa
14,300
On December 31 of the current year, the partnership makes a pro
rata operating distribution of:
Partner
Distribution
Adam
Cash
$
22,600
Alyssa
Cash
$
11,200
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$
11,400...

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
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Gary's basis in his interest in the GAR Partnership is $24,000.
In complete liquidation fo his interest, Gary receives cash of
$4,000 and land having a FMV of $40,000 and an inside basis of
$15,000. a. How much gain or loss, if any, does Gary recognize for
tax purposes b. What is Gary's basis in the land after
distribution?

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
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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
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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
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Cash
$
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$
40,000
Inventory
55,000
65,000
Land
30,000
45,000
Totals
$
125,000
$
150,000
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