Partnership Distribution: Liquidating and Non-liquidating

Question 1
1. 1. Delilah receives a proportionate, nonliquidating distribution from the Carbon Partnership. The distribution consists of $50,000 cash and property with an adjusted basis to the partnership of $150,000 and a fair market value of $180,000. Immediately before the distribution, Delilah's adjusted basis for her partnership interest is $170,000. Delilah's basis in the noncash property received is:

$180,000

$150,000

$120,000

$50,000

None of the above.
10 points

Question 2
1. Rosalie is a real estate developer and owns property that is treated as inventory (not a capital asset) in her business. She contributed a parcel of this land (basis $40,000; fair market value $48,000) to a partnership, which will also hold it as inventory. After three years, the partnership sells the land for $60,000. The partnership will recognize a $20,000 capital gain on sale of the property.
True
False
10 points

Question 3
1. 1. Juliet contributed property with a $48,000 basis and fair market value of $100,000 to the JT Partnership in exchange for a 40% interest in partnership capital and profits. During the first year of partnership operations, JT had net taxable income of $40,000 and tax-exempt income of $80,000. The partnership distributed $40,000 cash to Juliet. Her share of partnership recourse liabilities on the last day of the partnership year was $30,000. Juliet's adjusted basis (outside basis) for her partnership interest at year-end is:

$64,000

$126,000

$70,000

$86,000

None of the above
Question 4
1. 1. Micah and Ariana formed an equal partnership on June 1 of the current year. Micah contributed $10,000 cash and land with a basis of $6,000 and a fair market value of $15,000. Ariana contributed equipment with a basis of $30,000 and a value of $25,000. Micah's tax basis in his interest is $16,000; Ariana's tax basis is also $25,000.
True
False

Question 5
1. 1. The Copper Partnership distributed $30,000 cash to Esme in a proportionate, nonliquidating distribution. Esme's basis in her partnership interest was $20,000 immediately before the distribution. As a result of the distribution, Esme's basis is reduced to $0, and she recognizes $10,000 of capital gain.
True
False
10 points
Question 6
1. 1. Izzy's partnership interest basis is $60,000. Izzy receives a proportionate, liquidating distribution from a liquidating partnership of $45,000 cash and inventory having a basis of $20,000 to the partnership and a fair market value of $6,000. Izzy assigns a basis of $6,000 to the inventory and recognizes a $9,000 loss.
True
False

Question 7
1. 1. Piper and Adam formed a partnership. Piper received a 50% interest in partnership capital and profits in exchange for contributing land with a basis of $160,000 and a fair market value of $300,000. Adam received a 50% interest in partnership capital and profits in exchange for contributing $300,000 of cash. Three years after the contribution date, the land contributed by Piper is sold by the partnership to a third party for $360,000. How much taxable gain will Piper recognize from the sale?

$170,000

$140,000

$200,000

$30,000

None of the above

Question 8
1. 1. Molly owns a 30% interest in the capital and profits of the Silver Partnership. Immediately before she receives a proportionate nonliquidating distribution from Silver, the basis of her partnership interest is $60,000. The distribution consists of $20,000 in cash and land with a fair market value of $80,000. Silver's adjusted basis in the land immediately before the distribution is $70,000. As a result of the distribution, Molly recognizes a gain of $30,000 and her basis in the land is $70,000.
True
False

Question 9
1. 1. Sydney is a partner in the Lime Partnership, which is not publicly traded. Her allocable share of Lime's passive ordinary losses from a nonrealty activity for the current year is ($300,000). Sydney has a $125,000 adjusted basis (outside basis) for her interest in Lime (before deduction of any of the passive losses). Her amount "at risk" under §Â 465 is $100,000 (before deduction of any of the passive losses). She also has $60,000 of passive income from other sources. How much of the $300,000 passive loss allocated to her can Sydney deduct on her current year's tax return?

$60,000

$100,000

$300,000

$125,000

None of the above

Question 10
1. 1. Joseph has an outside basis of $80,000 in the Tungsten Partnership as of December 31 of the current year. On that date the partnership liquidates and distributes to Joseph a proportionate distribution of $35,000 cash and inventory with an inside basis to the partnership of $25,000 and a fair market value of $50,000. In addition, Joseph receives a safe which has an inside basis and fair market value of $4,500 and $6,000, respectively. None of the distribution is for partnership goodwill. How much gain or loss will Joseph recognize on the distribution, and what basis will he take in the safe?

$0 loss; $20,000 basis

$14,000 loss; $6,000 basis

$5,000 loss; $-0- basis

$15,500 loss; $4,500 basis

None of the above