The December 31 balance sheet of the calendar-year BCD LLP reads as follows.

Each partner shares in 1/3 of the partnership capital, income, gain, loss, deduction, and credit. Capital is not a material income-producing factor to the partnership. On December 31, Christina (treated as a general partner) receives a distribution of $140,000 cash in liquidation of her partnership interest under § 736. Nothing is stated in the partnership agreement about goodwill. Christina's outside basis for the partnership interest immediately before the distribution is $84,000.
How much is Christina's recognized gain from the distribution and what is the character of the gain? How much, if anything, can the partnership deduct? If a § 754 election is in effect, what (if any) adjustment is made? Show your calculations.

Question

The December 31 balance sheet of the calendar-year BCD LLP reads as follows.
  
Each partner shares in 1/3 of the partnership capital, income, gain, loss, deduction, and credit. Capital is not a material income-producing factor to the partnership. On December 31, Christina (treated as a general partner) receives a distribution of $140,000 cash in liquidation of her partnership interest under § 736. Nothing is stated in the partnership agreement about goodwill. Christina's outside basis for the partnership interest immediately before the distribution is $84,000.
How much is Christina's recognized gain from the distribution and what is the character of the gain? How much, if anything, can the partnership deduct? If a § 754 election is in effect, what (if any) adjustment is made? Show your calculations.

Quizplus · Accepted Answer

The Answer of The December 31 balance sheet of the calendar-year BCD LLP reads as follows.
  
Each partner shares in 1/3 of the partnership capital, income, gain, loss, deduction, and credit. Capital is not a material income-producing factor to the partnership. On December 31, Christina (treated as a general partner) receives a distribution of $140,000 cash in liquidation of her partnership interest under § 736. Nothing is stated in the partnership agreement about goodwill. Christina's outside basis for the partnership interest immediately before the distribution is $84,000.
How much is Christina's recognized gain from the distribution and what is the character of the gain? How much, if anything, can the partnership deduct? If a § 754 election is in effect, what (if any) adjustment is made? Show your calculations.

The December 31 Balance Sheet of the Calendar-Year BCD LLP