Computing partners recognized gain or loss
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Need help answering questions (a), (b), (c), (d), (e), and (f)
Each of the following independent cases describes a liquidating distribution to a partner. Compute the partner?s recognized gain or loss and basis in any property received.
(a) Hobson Corporation received $30,000 cash. Its outside basis was $37,500.
(b) Mrs. Chang received $30,000 cash. Her outside basis was $22,000.
(c) Ms. Mallory received $18,000 cash and a partnership capital asset ($10,000 FMV and $1,200 inside basis). Her outside basis was $22,000.
(d) Dowling Inc. received $6,300 cash and a partnership capital asset ($50,000 FMV and $45,000 inside basis). Its outside basis was $30,000.
(e) Ms. Anitra received a partnership capital asset ($100,000 FMV and $70,000 inside basis). Her outside basis was $40,000.
(f) Lincoln Corporation received $20,000 cash and a partnership capital asset ($3,000 FMV and $2,200 inside basis). Its outside basis was $19,000.
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Solution Summary
The expert computes the partners which are recognized as gains or losses. The partnership for capital assets are given.
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(a) Hobson Corporation received $30,000 cash. Its outside basis was $37,500.
The cash is deemed distributed and reduces Hobson's outside basis to $37,500-30,000=$7,500
(b) Mrs. Chang received $30,000 cash. Her outside basis was $22,000.
partner gain = $30,000 - $22,000= $8,000
partner gain recognition: When a partnership distribution is in the form of cash, gain must be recognized by the distributee partner to the extent that the money received exceeds the partner's adjusted basis in the partnership interest at the time of the distribution. (The computation of gain is made without regard to any other property that may be distributed concurrently. Any gain recognized in a distribution is treated as gain from the sale or exchange of a ...
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