ACCT 540 (Need Help With Highlighted - Let Me Know If Something Is Incorrect)

Using the number on the table below determine the tax treatment to the partner who receives the distribution indicated, and then assuming the partnership has made a Section 754 election, determine the Section 734 adjustment, if any. If there is none write None or N/A

In EACH case the basis of the partners interest is $120,000 before the distribution.

The distribution consists of cash, a capital asset, and inventory as shown. If a column is blank then that type of asset was not distributed. The column for Liquidating indicates whether the distribution liquidated the partners interest or not.

Situation	Cash Received	Basis of Capital Asset	Basis of Inventory	Liquidating?
A	10,000	50,000	None Distributed	No
B	40,000	80,000	None Distributed	Yes
C	200,000	None Distributed	50,000	No
D	100,000	None Distributed	30,000	Yes
E	-0-	20,000	30,000	No

COMPLETE THIS TABLE

Situation	Partner Gain/	Basis to Cash	Basis to Property	Section 734 Adjustment, if any
A	$60,000	10,000	50,000
B	$0 None	40,000	80,000
C	$130,000 Gain	200,000	50,000
D	$10,000 Gain	100,000	30,000
E	$70,000	0	50,000