The December 31, 2014, balance sheet of HDL Partnership (a service partnership) is as follows: Adjusted Basis
Question:
The December 31, 2014, balance sheet of HDL Partnership (a service partnership) is as follows:
Adjusted
Basis FMV
Cash $180,000 $180,000
Receivables –0– 60,000
Capital assets 90,000 120,000
Total $270,000 $360,000
Huey, capital $ 90,000 $120,000
Dewey, capital 90,000 120,000
Louis, capital 90,000 120,000
Total $270,000 $360,000 T
he partners share equally in partnership capital, income, gain, loss, deduction, and credit. Capital is NOT a material income-producing factor to the partnership. On December 31, 2014, partner Huey receives a distribution of $120,000 cash in liquidation of his partnership interest under Section 736.
Huey’s outside basis for the partnership interest immediately before the distribution is $90,000.
How much is Huey’s gain or loss on the distribution and what is its character? (Ignore disproportionate distribution rules.)
(a) What is the gain or loss recognized by Huey?
(b) What is the ordinary income (if any).
Expert Answer:
Items Explanation Hueys share of the receivables 60000 13 20000 Hueys share o... View the full answer
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
