Josh owns a 25% capital and profits interest in the calendar year GDJ Partnership. His adjusted basis for his partnership interest on October 15 of the current year is $300,000. On that date, the partnership liquidates and makes a proportionate distribution of the following assets to Josh. $\begin{array}{lrr}&\text { Partnership's Basis in Asset} &\text { Asset's Fair Market Value }\
\text { Cash } & \$ 70,000 & \$ 70,000 \
\text { Inventory } & 120,000 & 150,000
\end{array}$
a. Calculate Josh's recognized gain or loss on the liquidating distribution, if any, and his basis in the distributed inventory.
How would your answer to
a. change if the partnership also distributed a small parcel of land it
b. had held for investment to Josh? Assume the land has a $5,000 adjusted basis FMV is $8,000)
to the partnership.

Question

Josh owns a 25% capital and profits interest in the calendar year GDJ Partnership. His adjusted basis for his partnership interest on October 15 of the current year is $300,000. On that date, the partnership liquidates and makes a proportionate distribution of the following assets to Josh. $\begin{array}{lrr}&\text { Partnership's Basis in Asset} &\text { Asset's Fair Market Value }\
\text { Cash } & \$ 70,000 & \$ 70,000 \
\text { Inventory } & 120,000 & 150,000
\end{array}$ 
a. Calculate Josh's recognized gain or loss on the liquidating distribution, if any, and his basis in the distributed inventory.
How would your answer to
a. change if the partnership also distributed a small parcel of land it
b. had held for investment to Josh? Assume the land has a $5,000 adjusted basis FMV is $8,000)
to the partnership.

Quizplus · Accepted Answer

The Answer of Josh owns a 25% capital and profits interest in the calendar year GDJ Partnership. His adjusted basis for his partnership interest on October 15 of the current year is $300,000. On that date, the partnership liquidates and makes a proportionate distribution of the following assets to Josh. $\begin{array}{lrr}&\text { Partnership's Basis in Asset} &\text { Asset's Fair Market Value }\
\text { Cash } & \$ 70,000 & \$ 70,000 \
\text { Inventory } & 120,000 & 150,000
\end{array}$ 
a. Calculate Josh's recognized gain or loss on the liquidating distribution, if any, and his basis in the distributed inventory.
How would your answer to
a. change if the partnership also distributed a small parcel of land it
b. had held for investment to Josh? Assume the land has a $5,000 adjusted basis FMV is $8,000)
to the partnership.

Josh Owns a 25% Capital and Profits Interest in the Calendar