Landon received $30,000 cash and a capital asset (basis of $60,000 and fair market value of $80,000)in a proportionate liquidating distribution.His basis in his partnership interest was $100,000 prior to the distribution.How much gain or loss does Landon recognize and what is his basis in the asset received?
A)$0 gain or loss;$70,000 basis.
B)$0 gain or loss;$60,000 basis.
C)$10,000 gain;$80,000 basis.
D)$10,000 loss;$60,000 basis.
E)$10,000 loss;$80,000 basis.

Question

Quizplus · Accepted Answer

Landon's total basis in the partnership interest is $100,000. He receives $30,000 in cash and a capital asset with a basis of $60,000. The total basis of the assets received is $90,000 ($30,000 cash + $60,000 asset basis), which is less than his partnership interest basis. Therefore, he recognizes no gain or loss, and his basis in the asset received is adjusted to $70,000 ($100,000 original basis - $30,000 cash received).

Landon Received $30,000 Cash and a Capital Asset (Basis of $60,000