Answer 1 and 2

A partnership's records show:

Inside Basis FMV

Cash $4,000 $4,000

Inventory 16,000 24,000

Total assets $20,000 $28,000

1.

D's outside basis in her 25% interest in this partnership is $6,000. She receives 25% of all partnership assets in a liquidating distribution. Ds basis in the inventory received is

		$0
		$4,000
		$5,000
		$6,000
		None of the above

2.

In the previous problem, D should recognize

		No gain or loss
		$2,500 gain
		$1,000 loss
		$600 loss
		None of the above