100. Ricky is a 30% partner in the ABC Partnership. ABC makes a proportionate li

Question

100. Ricky is a 30% partner in the ABC Partnership. ABC makes a proportionate liquidating distribution of $15,000 cash, inventory property with a fair market value of $40,000 (inside basis of $30,000), and a parcel of land with a fair value of $15,000 (inside basis of $5,000). ABC has no liabilities at the date of the distribution. Ricky's basis in ABC is $85,000. What is Ricky's basis in the distributed inventory and land?

A. $10,000 inventory, $5,000 land

B. $40,000 inventory, $15,000 land

C. $30,000 inventory, $40,000 land

D. $20,000 inventory, $10,000 land

Explanation / Answer

Basis in partneship =85000

Less: cash received= 15000

Amount to be allocated to

other assets received will be= 70000

option c. 30000 inventory , 40000 land is correct because by totalling it equals 70000

no gain or loss is recognised in this liquidation distribution.

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