Molly, a 30% partner in XYZ partnership, has a basis of $55,000 in her partnership interest. She

Question:

Molly, a 30% partner in XYZ partnership, has a basis of $55,000 in her partnership interest. She receives a cash distribution of $54,000 at year-end. The distribution has what tax effect on Molly?

a. No gain or loss is recognized, and she has a $55,000 basis in her partnership interest.

b. No gain or loss is recognized, and she has a $1,000 basis in her partnership interest.

c. She has a recognized gain of $37,500 and a basis of $0 in her partnership interest.

d. She has a recognized gain of $55,000 and a basis of $0 in her partnership interest.

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...

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