Paula's basis in her partnership interest is $60,000. In liquidation of her interest, the partnership makes a proportionate distribution to Paula of $20,000 of cash and inventory (basis of $5,000 and value of $7,000). No "other property" was distributed. (Assume that the partnership then liquidates.)

a. Use the format of Concept Summary of 11.3 to create a spreadsheet to calculate the effects of the distribution. Set up an Inputs area for the amounts on lines 1, 2, 5, and 8. Code the formulas shown in the Calculations section to determine the amounts in the remaining lines. You will use "sum", "min", "max", and "if/then/else" formulas. Enter Paula's relevant facts in the Inputs section of your spreadsheet.

b. Based on the information in your spreadsheet, how much gain or loss, if any, will Paula recognize on the distribution?

c. What basis will Paula take in the inventory?

d. What happens if the partnership also distributes artwork to Paula with a basis of $1,000 and a fair market value of $30,000? Adjust the Inputs section of your spreadsheet, and explain your findings.

e. Return to the original facts. Conceptually, how would your answer to part (b) or (c) change if this had been a current distribution? (You do not need to make a spreadsheet for the current distribution rules.) Explain.

Please answer only part e of this question.

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Part e Conceptually how would your answer to part b or c change if this had been a current distribut... View the full answer