Under what conditions will a partner recognize a gain in a liquidating distribution?
A)When a partnership distributes only money and the amount of the distribution exceeds the partner's outside basis.
B)When a partnership distributes only money and the amount of the distribution is less than the partner's outside basis.
C)When a partnership distributes money, hot assets, and other property and the amount of the distribution exceeds the partner's outside basis.
D)When a partnership distributes money, hot assets, and other property and the amount of the distribution is less than the partner's outside basis.

Question

Quizplus · Accepted Answer

A partner will recognize a gain in a liquidating distribution when the partnership distributes only money and the amount of the distribution exceeds the partner's outside basis. In this scenario, the partner will recognize a capital gain equal to the excess of the distribution over their outside basis. Alternatively, if the distribution is less than the partner's outside basis, no gain or loss is recognized.

Under What Conditions Will a Partner Recognize a Gain in a Liquidating