Tatia's basis in her TRQ Partnership interest is $33,700. Tatia receives a distribution of $24,100 cash from TRQ in complete liquidation of her interest. The three partners in TRQ share profits, losses, and capital equally. TRQ has the following balance sheet:
a. What is the amount and character of Tatia's recognized gain or loss? What is the effect on the partnership assets?
b. If TRQ has a §754 election in place, what is the amount and sign (positive or negative) of the special basis adjustment?

Question

Tatia's basis in her TRQ Partnership interest is $33,700. Tatia receives a distribution of $24,100 cash from TRQ in complete liquidation of her interest. The three partners in TRQ share profits, losses, and capital equally. TRQ has the following balance sheet:
  a. What is the amount and character of Tatia's recognized gain or loss? What is the effect on the partnership assets?
b. If TRQ has a §754 election in place, what is the amount and sign (positive or negative) of the special basis adjustment?

Quizplus · Accepted Answer

The Answer of Tatia's basis in her TRQ Partnership interest is $33,700. Tatia receives a distribution of $24,100 cash from TRQ in complete liquidation of her interest. The three partners in TRQ share profits, losses, and capital equally. TRQ has the following balance sheet:
  a. What is the amount and character of Tatia's recognized gain or loss? What is the effect on the partnership assets?
b. If TRQ has a §754 election in place, what is the amount and sign (positive or negative) of the special basis adjustment?

Tatia's Basis in Her TRQ Partnership Interest Is $33,700