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    Income tax: Partnership

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    2. James received $42,000 cash and a capital asset (basis of $45,000 and fair market value of $54,000) in a proportionate liquidating distribution. His basis in his partnership interest was $90,000 prior to the distribution. How much gain or loss does James recognize and what is his basis in the asset received?

    a. $0 gain or loss; $45,000 basis.
    b. $0 gain or loss; $48,000 basis.
    c. $6,000 gain; $54,000 basis.
    d. $3,000 loss; $45,000 basis.
    e. $3,000 gain; $45,000 basis.

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    Solution Summary

    The basis in the assets received are analyzed.