ABC is an equal partnership. On January 1 of this year, As outside basis is $170 and
Question:
ABC is an equal partnership. On January 1 of this year, A’s outside basis is $170 and the partnership's balance sheet is as follows (expanded to include fair market values):
AB/Book | FMV | Liabilities | ||
Cash | 120 | 120 | 150 | |
Accounts Receivable | 0 | 30 | ||
Inventory | 30 | 60 | ||
Land #1 | 180 | 120 | ||
Land #2 | 90 | 120 | ||
Stock (non-marketable) | 90 | 150 | ||
510 | 600 | |||
Tax/Book | FMV | |||
A | 120 | 150 | ||
B | 120 | 150 | ||
C | 120 | 150 | ||
360 | 450 | |||
On this date, A receives the following alternative distributions in complete liquidation of her interest in the partnership. What are the tax consequences to A as a result of each of these distributions?
1. The accounts receivable and Land #1.
2. The accounts receivable and Land #2.
3. One-half the inventory and Land #1.
4. One-third of both the inventory and the accounts receivables and Land #2.
5. The accounts receivable and a one-half interest in both Land #1 and Land #2.
a. What difference would it make if A’s basis prior to the distribution were $148?
b. What difference would it make if A’s basis prior to the distribution were $210?
6. One-third of both the inventory and the accounts receivables and $120 cash.
a. What difference would it make if A’s outside basis were only $100?
b. What difference would it make if A’s outside basis were $200?
Financial Accounting
ISBN: 978-1259222139
9th edition
Authors: Robert Libby, Patricia Libby, Frank Hodge