A partner recognizes a loss when he receives cash and other property with inside bases greater than his outside basis in a liquidating distribution.
For loss recognition, two conditions must be met: (1) the distribution includes only cash or hot assets; and (2) the partner's outside basis is greater than the sum of the inside bases of the distributed assets.

Question

Quizplus · Accepted Answer

A partner recognizes a loss in a liquidating distribution only if the distribution consists solely of cash, unrealized receivables, and inventory, and the partner's outside basis exceeds the inside basis of these distributed assets.

A Partner Recognizes a Loss When He Receives Cash and Other