What are the steps that should be followed in

This preview shows page 9 - 11 out of 11 pages.

7. What are the steps that should be followed in determining the taxability of a distribution to which Code Sec. 751(b) applies?
8. The DEF partnership has the following balance sheet: Basis FMV Cash $48,000 $48,000 Inventory 24,000 60,000 $72,000 $108,000 Capital, D $24,000 $36,000 Capital, E 24,000 36,000 Capital, F 24,000 36,000 $72,000 $108,000 If partner D gets a cash distribution in liquidation of $36,000, what will be the tax effects to D and the partnership?
©2015 CCH Incorporated. All Rights Reserved.
Practical Guide to Partnerships and LLCs—Instructor’s Guide Solutions 10 Finally, D is treated as receiving a distribution of $16,000 cash ($36,000 cash actually distributed minus $20,000 hypothetically distributed in the exchange above. Since D’s remaining basis is $16,000, D will not have any income, but her basis will be reduced to zero.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture