1. Karli owns a 25% capital and profitsinterest in the calendar-year KJDV Partnership. Her adjusted basisfor her partnership interest on July 1 of the current year is$200,000. On that date, she receives a proportionate nonliquidatingdistribution of the following assets:
Partnershipâs Basis in Asset
Assetâs Fair Market Value
Cash
$120,000
$120,000
Inventory
50,000
60,000
Land
70,000
100,000
â
a. Calculate Karliâs recognized gain or loss on the distribution, ifany.
b. Calculate the partnership gain/loss from the distribution
c. Calculate Karliâs basis in the inventory received
d. Calculate Karliâs basis in land received. The land is a capitalasset
e. Calculate Karliâs Outside basis in the partnership interest afterthe distribution
1. Karli owns a 25% capital and profitsinterest in the calendar-year KJDV Partnership. Her adjusted basisfor her partnership interest on July 1 of the current year is$200,000. On that date, she receives a proportionate nonliquidatingdistribution of the following assets:
Partnershipâs Basis in Asset | Assetâs Fair Market Value | |
Cash | $120,000 | $120,000 |
Inventory | 50,000 | 60,000 |
Land | 70,000 | 100,000 |
â
| a. Calculate Karliâs recognized gain or loss on the distribution, ifany. b. Calculate the partnership gain/loss from the distribution c. Calculate Karliâs basis in the inventory received d. Calculate Karliâs basis in land received. The land is a capitalasset e. Calculate Karliâs Outside basis in the partnership interest afterthe distribution |
Related questions
Samantha decides to leave the SRK Partnership after owning the interest for many years. She owns a 52% capital, profits, and loss interest in the general partnership (which is not a service partnership). Samanthaâs basis in her partnership interest is $ 60,000 just before she leaves the partnership. The partnership agreement does not mention payments to partners who leave the partnership. The partnership has not made an optional basis adjustment election ( Sec. 754). All partnership liabilities are recourse liabilities, and Samanthaâs share is equal to her loss interest. When Samantha leaves the partnership, the assets and liabilities for the partnership are as follows:
| Partnershipâs Basis | FMV | |
| Assets | ||
| Cash | $120,000 | $120,000 |
| Inventory | $12,000 | $12,000 |
| Receivables | -0- | $32,000 |
| Land | 30,000 | 50,000 |
| Total Assets | $162,000 | $214,000 |
| Liablities | 30,000 | 30,000 |
Analyze the following two alternatives, and answer the associated questions for each alternative.
a. Samantha could receive a cash payment of $ 110,000 from the partnership to terminate her interest in the partnership. Does Samantha or the partnership have any income, deduction, gain, or loss? Determine both the amount and character of any items.
b. Rook already owns a 30% general interest in the SRK partnership prior to Samanthaâs departure. Rook is willing to buy Samanthaâs partnership interest for a cash payment of $ 110,000. What income, gain, loss, or deduction will Samantha recognize on the sale? What are the tax implications for the partnership if Rook buys Samanthaâs interest?
