A partner will recognize a loss from a liquidating distribution when the distribution includes only cash, unrealized receivables, and inventory and the partner's outside basis is less than the sum of the bases of the distributed assets.
The partner's outside basis must be greater than the sum of the inside bases of the distributed assets for loss recognition.

Question

Quizplus · Accepted Answer

The statement is incorrect. The partner's outside basis must be less than the sum of the inside bases of the distributed assets for loss recognition.

A Partner Will Recognize a Loss from a Liquidating Distribution