Beth has an outside basis of $60,000 in the BBDE Partnership as of December 31 of the current year. On that date the partnership liquidates and distributes to Beth a proportionate distribution of $20,000 cash and inventory with an inside basis to the partnership of $18,000 and a fair market value of $22,000. In addition, Beth receives a desk (not inventory) which has an inside basis and fair market value of $200 and $350, respectively. None of the distribution is for partnership goodwill. How much gain or loss will Beth recognize on the distribution, and what basis will she take in the desk?
A) $21,800 loss; $200 basis.
B) $21,650 loss; $350 basis.
C) $0 loss; $200 basis.
D) $0 loss; $22,000 basis.
E) None of the above.

Question

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The Answer of Beth has an outside basis of $60,000 in the BBDE Partnership as of December 31 of the current year. On that date the partnership liquidates and distributes to Beth a proportionate distribution of $20,000 cash and inventory with an inside basis to the partnership of $18,000 and a fair market value of $22,000. In addition, Beth receives a desk (not inventory) which has an inside basis and fair market value of $200 and $350, respectively. None of the distribution is for partnership goodwill. How much gain or loss will Beth recognize on the distribution, and what basis will she take in the desk?
A) $21,800 loss; $200 basis.
B) $21,650 loss; $350 basis.
C) $0 loss; $200 basis.
D) $0 loss; $22,000 basis.
E) None of the above.

Beth Has an Outside Basis of $60,000 in the BBDE