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?

Expert Solution

	Answer

	Solution:-

1)	There is no gain or loss. The deficit between inside an outside basis is = $25,000($120,000*-$95,000)

	* Cash $40,000+Inventory $30,000+Unrealized value $50,000 = $120,000
	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
	Total	$ 95,000

2)	Loss will Be equals to($130,000-$120,000)= $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 of partnership.



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