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When Teri’s outside basis in the TMF Partnership is $80,000, thepartnership distributes to her $30,000 of cash, an accountreceivable (fair market value

of $60,000, inside basis to the partnership of $0), and a parcelof land (fair market

value of $60,000, inside basis to the partnership of $80,000).Teri remains a partner in the partnership, and the distribution isproportionate to the partners.

a. Determine the recognized gainor loss to the partnership as a result of this distribution.

b. Determine the recognized gain or lossto Teri as a result of the distribution.

c. Determine Teri’s basis in theland, account receivable, and TMF Partnership after thedistribution.

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Deanna Hettinger
Deanna HettingerLv2
28 Sep 2019

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Related questions

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:

Partnership’s Basis in Asset

Asset’s Fair Market Value

Cash

$120,000

$120,000

Inventory

50,000

60,000

Land

70,000

100,000

​

a. Calculate Karli’s recognized gain or loss on the distribution, ifany.

b. Calculate the partnership gain/loss from the distribution

c. Calculate Karli’s basis in the inventory received

d. Calculate Karli’s basis in land received. The land is a capitalasset

e. Calculate Karli’s Outside basis in the partnership interest afterthe distribution

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 has a basis of $15,000 in a partnership, and receives a non liquidating distribution of land with an adjusted basis of $16,000, but a FMV of $18,000, there will be a gain of $1,000.
4. A non liquidating distribution of only cash, may result in a deductible loss.
5. A liquidating distribution of only land, may result in a deductible loss.
6. In a nonliquidating distribution of property, the partner's basis must equal zero.
7. In a nonliquidating distribution, if there is sufficient basis to the partner, the property received will have the same basis to the partner as the property had to the partnership.
8. A partner recognizes a gain on a distribution only to the extent that cash received exceeds the partner's basis in the partnership.

9. Loss is recognized by the partner who receives a nonliquidating distribution of cash, when the amount of cash is less than his basis in the partnership interest before the distribution.
10. If a partner has a basis of $15,000 in a partnership, and receives a nonliquidating distribution of land with an adjusted basis of $16,000, but a FMV of $18,000, the land will have a basis of $15,000.

true and false questions

A redemption is always "essentially equivalent to a dividend"where a corporation's sole stockholder causes part of his shares tobe redeemed by the corporation.

When a partner receives a cash distribution from a partnershipthe partner always recognizes a gain on such distribution.

If a partner receives a non-liquidating cash distribution, thepartner will recognize a loss if the cash distributed is less thanthe partner's outside basis at the time of the distribution.

When a partner’s share of partnership liabilities and debts isreduced or relieved, such reduction or relief is treated as adeemed cash distribution which increases the partner’s outsidebasis.

A partner contributes property used in a trade or business to apartnership in return for a partnership interest. The partner heldthe property for 2 years prior to contribution. The partner thensells his partnership interest three weeks later. The contributingpartner will realize a short-term capital gain/loss on the sale ofhis partnership interest.

A distribution by a C-corporation that has Earnings and Profitsis always a dividend.

John is a 30% partner in the ABC Partnership with an outsidebasis of $42,000. ABC partnership distributes $15,000 of cash incomplete liquidation of John’s interest. John recognizes anordinary loss of $27,000 on the distribution

Like partnerships, an S corporation shareholder's stock basismust be adjusted annually.

A related party individual that receives a liquidatingdistribution from a corporation can recognize a loss

If a partnership makes a non-liquidating distribution oftangible property, and the inside basis of the property exceeds theoutside basis of the recipient-partner, the partner’s basis in thedistributed property is equal to his outside basis and he realizesgain on the difference between the inside basis and outsidebasis.

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