Ted is a 30percent partner in the TDW Partnership, with an outside basis of $20,000. TDW distributes $15,000 of cash in complete liquidation of Ted's interest. Ted recognizes a capital loss of $5,000 on the distribution.

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Ted's capital loss is calculated by subtracting the cash distribution ($15,000) from his outside basis in the partnership ($20,000), resulting in a $5,000 capital loss.

Ted Is a 30percent Partner in the TDW Partnership, with an Outside