The BR LLC owns an unrealized receivable with a basis of $0 and fair market value of $200,000 plus cash of $200,000. If BREE distributes $20,000 of the receivable to 50% member Brenda and $20,000 of cash to 50%
Member Renee, which one of the following statements is true?
A) Brenda recognizes $20,000 of capital gain.
B) The partnership recognizes $20,000 of ordinary income.
C) Renee recognizes $10,000 of ordinary income.
D) Brenda recognizes $10,000 of ordinary income.
E) Because both partners receive the same value, none of the parties recognizes gross income.

Question

Quizplus · Accepted Answer

The Answer of The BR LLC owns an unrealized receivable with a basis of $0 and fair market value of $200,000 plus cash of $200,000. If BREE distributes $20,000 of the receivable to 50% member Brenda and $20,000 of cash to 50%
Member Renee, which one of the following statements is true?
A) Brenda recognizes $20,000 of capital gain.
B) The partnership recognizes $20,000 of ordinary income.
C) Renee recognizes $10,000 of ordinary income.
D) Brenda recognizes $10,000 of ordinary income.
E) Because both partners receive the same value, none of the parties recognizes gross income.

The BR LLC Owns an Unrealized Receivable with a Basis