# Before the liquidation zs outside basis is 35000 what

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Before the liquidation, Z’s outside basis is $35,000.What is the basis of assets that Partner Z receives? 28Liquidating Property Distributions that Involve Multiple Category 2 Assets (cont.)Example of the basis decreaseapplication cont.1.Z’s outside basis is decreased by Category 1 assets distributed$35,000 - $2,000 -$1,000 -$300 =$31,7002.Determine if Z’s remaining basis is > or < inside basis of Category 2 assetsInside $20,000 +$25,000 + $3,000 =$48,000; Outside $31,700Basis decrease since$31,700 outside < $48,000 inside3.Basis decrease allocated according to relative depreciation$48,000 - $31,700 outside =$16,300
29Liquidating Property Distributions With Multiple Category 2 Assets (cont.)4.If multiple Category 2 assets distributed with unrealized depreciation, allocate the basis decrease as followsPartner'sbasis in thedistributedasset=Carryoverbasis of a Category 2asset with unrealizeddepreciation-unrealized depreciationtotal unrealized depreciationxBasis decreaseto be allocated
30Liquidating Distributions With Multiple Category 2 Assets (cont.)Example of basisdecreaseapplication (cont.) Basis decrease $16,300 ($48,000 inside - $31,700 remaining outside) allocated first to depreciated assets, based on relative depreciationBasisFMV UnrealizedBasis in Category 1 3,300 3,300 Depreciation distributed assets Machine 20,000 10,000 10,000 6,960*Furniture 3,000 500 2,500 0**Truck25,00030,000-------24,740***$51,300 $43,800***Truck:$25,000 carryover basis – remaining decrease $260 =$24,740960,6$300,16$500,2$000,10$000,10$basiscarryover 000,20$:Machine*0basistherefore,;260$300,16$500,2$000,10$500,2$000,3$:Furniture**
Liquidating Property DistributionsAllocation of partner’s remaining outside basisPartner's remaining outside basis (after reductions for cash and Category 1 assets) is greater than the aggregate bases of the distributed Category 2 assetsBasis increase formula must be used to preserve the potential lossBasis increase allocated to Category 2 assets based on unrealized appreciation, up to FMVIf the outside basis exceeds carryover basis plus unrealized appreciation, allocate the excess according to FMV
32Liquidating Property Distributions With Multiple Category 2 Assets (cont.)Example of the basis increaseapplicationPartner X receives a liquidating distribution ofBasisFMVCash$2,000$2,000Receivables1,0001,000Inventory300300Machine20,00025,000Truck25,00035,000Furniture3,000500$51,300$63,800Before the liquidation, X’s outside basis is $60,000.What is the basis of assets that Partner receives? 33Liquidating Distributions With Multiple Category 2 Assets (cont.)Basis to be allocated:$60,000 outside basis - $51,300 inside basis =$8,700; or $60,000 -$2,000 - $1,000 -$300 - $20,000 -$25,000 - $3,000 =$8,700BasisFMVAsset UnrealizedPartner's basis Category Appreciation in distributed assets Cash$2,000$2,000 Cash -------$2,000Receivables 1,000 1,0001 -------1,000Inventory 300 300 1 ------- 300Machine 20,00025,0002 5,000 22,900*Truck25,00035,0002 10,00030,800**Furniture 3,0005002 ------- 3,000$51,300$63,800$60,000800,30$800,5$000,25$;800,5$700,8$000,10$000,5$000,10$**900,22$900,2$000,20$;900,2$700,8$000,10$000,5$000,5$*
34Problem 10-32 Liquidating Distributions$20,000 to cash, leaving$25,000$25,000:$5,000 to asset; \$20,000 to equipment
Problem 10-3336
Anti-Abuse MeasuresDistributions of contributed property and circumvention of the like-kind exchange rules
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