The December 31, balance sheet of DBW, LLP, a service-providing partnership, is as follows.

The partners share equally in partnership capital, income, gain, loss, deduction, and credit. Capital is not a material income-producing factor to the partnership. On December 31, partner Dana (who is an active managing partner in the partnership) receives a distribution of $120,000 cash in liquidation of her partnership interest under § 736. Dana's outside basis for the partnership interest immediately before the distribution is $90,000. How much is Dana's gain or loss on the distribution and what is its character?

Question

The December 31, balance sheet of DBW, LLP, a service-providing partnership, is as follows.
  
The partners share equally in partnership capital, income, gain, loss, deduction, and credit. Capital is not a material income-producing factor to the partnership. On December 31, partner Dana (who is an active managing partner in the partnership) receives a distribution of $120,000 cash in liquidation of her partnership interest under § 736. Dana's outside basis for the partnership interest immediately before the distribution is $90,000. How much is Dana's gain or loss on the distribution and what is its character?

Quizplus · Accepted Answer

The Answer of The December 31, balance sheet of DBW, LLP, a service-providing partnership, is as follows.
  
The partners share equally in partnership capital, income, gain, loss, deduction, and credit. Capital is not a material income-producing factor to the partnership. On December 31, partner Dana (who is an active managing partner in the partnership) receives a distribution of $120,000 cash in liquidation of her partnership interest under § 736. Dana's outside basis for the partnership interest immediately before the distribution is $90,000. How much is Dana's gain or loss on the distribution and what is its character?

The December 31, Balance Sheet of DBW, LLP, a Service-Providing