Cadwallader has had a 30% interest in C&C Associates, a partnership, since 20X9. In 20X16, the partnership is liquidated. The partnership’s only assets at the time of liquidation are $50,000 in cash and land with a fair market value of $60,000 and a basis of $65,000. C&C Associates has no liabilities. Cadwallader’s adjusted basis for her partnership interest is $34,500 and she receives $30,000 cash in liquidation of her entire interest. What amount and type of loss should Cadwallader recognize on her 20X16 tax return?

a. $4,500 ordinary loss

b. $4,500 long-term capital loss

c. $4,500 short-term capital loss

d. $0

Answer rating: 100% (QA)

The partnership does not recognize either gain or loss on the liquidating ... View the full answer