Question

Quinn is a 15% partner of QUI Partnership. His basis was $10,000. In a complete liquidation of his interest in the partnership, Quinn receives: Cash of $2,000; Three pieces of land worth $2,500 each with adjusted bases of $2,200; $1,800; and $3,000. Which of the following is correct (several answers possible)?  

Quinn's basis in the partnership after the distribution is zero.

Quinn's basis in the partnership after the distribution is 1,000.

Quinn recognizes a loss of 1,000.

Quinn recognizes a gain of 1,000.

Quinn recognizes a loss of 8,000.

Quinn is a 15% partner of QUI Partnership. His basis was $10,000. In a complete liquidation of his interest, Quinn receives: Cash of $2,000; Three pieces of land worth $2,500 each with adjusted bases of $2,200; $1,800; and $3,000. Which of the following is correct (multiple answers possible)?

Quinn's basis in the cash received is $2,000.

Quinn does not recognize a gain or a loss.

Quinn realizes a loss of ($500).

Quinn's basis in land 1 is $2,500.

Quinn's basis in land 3 is $3,000.

Justin and Karl form JK Partnership. Justin contributes cash of $10,000 and Karl contributes land worth $25,000 with an adjusted basis of $18,000 and a mortgage of $15,000 (non-recourse debt). They share income, gains, and losses equally. What are Justin's and Karl's bases respectively? What are Justin's and Karl's book capital accounts respectively? Karl recognizes gain of how much?

Lance is a 20% partner of LG Partnership. His book capital account is $50,000 (which represents 20% of the partnership's book equity); his tax capital account is $32,000. He receives 50% of all profits and 20% of all losses. LG has non-recourse debt of $100,000 and recourse debt of $20,000. Which of the following is correct (several answers possible)?

Lance's basis in the partnership is $86,000.

The hypothetical loss is ($270,000)

Lance's share of non-recourse debt is $50,000.

Lance's share of non-recourse debt is $20,000.

Miriam is a 10% partner of MO Partnership and has a basis of $14,000. She receives 10% of all profits and $50% of all losses. In the current year, MOP reports long-term capital losses of ($36,000), charitable contributions of ($4,000), ordinary income of $10,000, and tax-exempt interest income of $1,800. Which of the following is correct (several answers possible)?

Miriam's basis at the end of the year is zero.

Miriam's share of the ordinary income is $5,000.

Miriam's share of the tax-exempt interest income is $180.

Miriam's suspended loss is ($90) long-term capital loss and ($10) charitable contribution deduction.

Miriam's share of the tax-exempt interest income increases Miriam's basis.

Miriam is a 10% partner of MO Partnership and has a basis of $14,000. She receives 10% of all profits and $50% of all losses. In the current year, MOP reports long-term capital losses of ($36,000), charitable contributions of ($4,000), ordinary income of ($10,000), and tax-exempt interest income of ($1,800). The long-term capital loss is from an asset that was contributed to the partnership by another partner (NOT Miriam) when it was worth $50,000 and had an adjusted basis of $60,000. Which of the following is correct?

Miriam's share of the total long-term capital loss is ($13,000).

Miriam's share of the total long-term capital loss is ($18,000).

Miriam's basis at the end of the year is zero.

Miriam's total suspended loss is ($100).

Joseph is a 40% partner in Jiffy Partnership. His basis was $25,000. In a non-liquidating (pro-rata) distribution, Joseph receives the following: Cash of $6,000; Inventory worth $12,000 with an adjusted basis of $10,000; Three parcels of undeveloped land worth $10,000 each with adjusted bases of $4,000; $11,000; and $15,000. Which of the following is correct (several answers possible)? Joseph's basis in the partnership after the distribution is zero. Joseph's basis in the inventory received is $10,000. Joseph's basis in land 1 is $1,500. Joseph recognizes gain of $21,000. Joseph is a 40% partner in Jiffy Partnership. His basis was $25,000. In a non-liquidating (pro-rata) distribution, Joseph receives the following: Cash of $6,000; Inventory worth $12,000 with an adjusted basis of $10,000; Three parcels of undeveloped land worth $10,000 each with adjusted bases of $4,000; $11,000; and $15,000. Two years before the distribution took place, Joseph had contributed property to the partnership with a fair market value of $15,000 and an adjusted basis of $8,500 (note this is not the property that is being distributed!). Which of the following answers is correct (several answers possible)? Joseph recognizes gain of $6,500. Joseph's basis in the inventory receives is $10,000. Joseph's basis in all three parcels of land is $15,500. Joseph's basis in the partnership after the distribution is zero. Joseph's basis in land 1 is $1,500. Joseph's basis in land 3 is 3,000.

Miriam's share of the ordinary income is $1,000.

Answer 1

Part 1
Total distribution received by Quinn
Cash	2000
Land
1st basis	2200
2nd basis	1800
3rd basis	3000
Total distribution received by Quinn	9000
Capital basis of Quinn	10000
Thus, loss to be recognized	1000
(10000-9000)
Part 2
Cash	2000
Land
1st basis	2200
2nd basis	1800
3rd basis	3000
Total distribution received by Quinn	9000
Quinn basis in the cash received is $2000
Part 3:
Bases of Justin and Karl
Contributions:	Justin	Karl
Cash	10000
Land		18000
Less: Mortgage	-	15000
Bases of Justin and Karl	10000	3000
Book capital	Justin	Karl
Cash	10000
Land		18000
	10000	18000
Contributions:	Justin	Karl
Cash	10000
Land		18000
Less: Mortgage	-	15000
Bases of Justin and Karl	10000	3000
Gain to be recognized by Karl
Bases of Justin and Karl
Justin	10000
Less: Karl's base	3000
	7000
Part 4:
Non-recourse debt	100000
Lance's share	50%
Lance's share of non-recourse debt	50000
Part 5:
Miriam's share of the tax exempt interest income
Tax exempt interest income	1800
Share of profit of Miriam	10%
Miriam's share of the tax exempt interest income	180
(1800 X 10%)
Part 6:
Miriam receives 50% of all losses
Long term capital loss	36000
Miriam's share of loss in long term capital loss	18000
Part 6:
Cash	6000
Inventory	10000
1st basis	4000
2nd basis	11000
3rd basis	15000
Total distribution received by Quinn	46000
Less: Capital basis of Joseph	25000
Gain to be recognized by Joseph	21000
Part 7:
Joseph's basis in the inventory is $10000