The XYZ Partnership owns the following assets on December 31: A partner has a 20% interest with a basis of $6,000 in XYZ before receiving a liquidating distribution of $10,000 cash. XYZ Partnership has no liabilities. His recognized gain is
A)$4,000 capital gain.
B)$3,000 capital gain and $1,000 ordinary income.
C)$3,000 ordinary income.
D)$3,000 ordinary income and $1,000 capital gain.

Question

The XYZ Partnership owns the following assets on December 31:  A partner has a 20% interest with a basis of $6,000 in XYZ before receiving a liquidating distribution of $10,000 cash. XYZ Partnership has no liabilities. His recognized gain is
A)$4,000 capital gain. 
B)$3,000 capital gain and $1,000 ordinary income. 
C)$3,000 ordinary income. 
D)$3,000 ordinary income and $1,000 capital gain.

Quizplus · Accepted Answer

The Answer of The XYZ Partnership owns the following assets on December 31:  A partner has a 20% interest with a basis of $6,000 in XYZ before receiving a liquidating distribution of $10,000 cash. XYZ Partnership has no liabilities. His recognized gain is
A)$4,000 capital gain. 
B)$3,000 capital gain and $1,000 ordinary income. 
C)$3,000 ordinary income. 
D)$3,000 ordinary income and $1,000 capital gain.

The XYZ Partnership Owns the Following Assets on December 31