Four years ago, Leona, Harry, and Jeremiah formed an equal partnership to which Leona contributed Blackacre (value = $1000, basis = $600), Harry contributed nonmarketable securities (value = $1000, basis = $200), and Jeremiah contributed $1000 cash. The partnership used the cash to buy Greenacre. All three assets are capital assets in the partnership’s hands. On January 1 of this year, the partnership’s balance sheet is as follows: Asset Basis Book FMV Blackacre $600 $1000 $1500 Greenacre 1000 1000 1500 Securities 200 1000 1500 Capital Accounts Tax Book Leona $600 $1000 Harry 200 1000 Jeremiah 1000 1000 On the current date, the following alternative distributions take place. 

What are the tax consequences to all parties of each distribution? 

(a) Jeremiah receives Blackacre in complete liquidation of his interest in the partnership. How would your answer change, if at all, if Blackacre were worth only $800 on the date of distribution? 

(b) Harry receives Greenacre in complete liquidation of his interest in the partnership. 

(c) Harry receives Blackacre in the complete distribution of his interest in the partnership.

Answer rating: 100% (QA)

Capital Accounts Tax Basis 600 Leona Harry Jeremiah 1000 200 Blackacre 600 1000 1500 Assets Basis Bo... View the full answer