Problem $10-29($LO$.3,4,10)$

Answer the following questions regarding four liquidating distribution scenarios, the partnership also liquidates.

If there is no gain or loss or if an amount is zero, enter $"0".$

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a$.$ For each, determine the amount and character of any gain or loss to be recognized by each partner and the basis of each asset $($other than cash$)$ received.

Assume for all scenarios that the distributions of hot assets are proportionate to the partners $($or there are no hot assets$).$ You can use the format in Concept Summary $10\mathrm{.}3.$

$(1)$ Rafael has a partnership basis of $$40,000$ and receives a distribution of $$50,000$ in cash.

He will recognize

of $fill in the blank $3$fd$1$ddf$2$cff$0066\_2$

$.$

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$(2)$ Mark has a partnership basis of $$50,000.$ He receives $$20,000$ cash and a capital asset with a basis to the partnership of $$25,000$ and a fair market value of $$40,000.$

He will recognize

of $fill in the blank $862$faf$05$af$9$d$01$d$\_2$

$.$ His basis in the capital asset is $fill in the blank $862$faf$05$af$9$d$01$d$\_3$

$.$

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$(3)$ Neil has a partnership basis of $$100,000.$ He receives $$40,000$ cash, inventory with a basis to the partnership of $$30,000,$ and a capital asset with a partnership basis of $$20,000.$ The inventory and capital asset have fair market values of $$20,000$ and $$30,000,$ respectively.

He will recognize

of $fill in the blank $26549$f$00800$bfd$1\_2$

$.$ The capital asset is allocated a basis of $fill in the blank $26549$f$00800$bfd$1\_3$

$,$ and the inventory will have a basis of $fill in the blank $26549$f$00800$bfd$1\_4$

$.$

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$(4)$ Oscar has a partnership basis of $$40,000.$ He receives a distribution of $$10,000$ cash and an account receivable with a basis of $$0$ to the partnership $($value is $$15,000).$

He will recognize

of $fill in the blank b$501280$b$2$f$8906$c$\_2$

$.$

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b$.$ In each of the four situations in part $($a$),$ are any planning techniques available to the partnership to avoid any $$lost basis$$ results?

For any of the four situations, students might answer $$make a $754$ election.$$ However, because the partnership is liquidating, this

viable.

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c$.$ In the four situations in part $($a$),$ would your answers change if the transaction had been a current distribution?

The results for transaction $(1)$

change since gain recognition rules are

for both current and liquidating distributions.

For transactions $(2)$ and $(3),$ the bases of capital assets

be adjusted in Step $3$ of a current distribution.

In situations $(2)$ to $(4),$ there

gains, losses, or basis adjustments in a current distribution, so

adjustment is needed.