The Taurin Partnership (calendar year-end) has the following assets as of Decemb

Question

The Taurin Partnership (calendar year-end) has the following assets as of December 31 of the current year:

On December 31, Taurin distributes $15,320 of cash, $10,213 (FMV) of accounts receivable, and $40,560 (FMV) of inventory to Emma (a one-third partner) in termination of her partnership interest. Emma’s basis in her partnership interest immediately prior to the distribution is $40,707. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

b. What is Emma’s basis in the distributed assets?

cash

accounts receivable

inventory

Tax Basis FMV Cash $ 45,960 $ 45,960 Accounts receivable 15,320 30,640 Inventory 82,200 121,680 Totals $ 143,480 $ 198,280

Explanation / Answer

Emmas does not recognize any gain or loss on the distribution. Rather, she will adjust the basis of the distributed assets

emmas share In Assets is One third partner

then

Cash 45960*1/3 15320 emmas basis is inside of the business

accounts receivable 30640*1/3 Emmas basis is Inside of the business

inventory 121680*1/3 Emmas basis is inside of the business

Note whenever the value of the prperty distributed if it equals amount of actual released then it is inside of the business if it is decreases then it is outside business

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