Josh Has a 25% Capital and Profits Interest in the Calendar-Year

question 44

Essay

Josh has a 25% capital and profits interest in the calendar-year GDJ Partnership. His adjusted basis for his partnership interest on October 15 of the current year is $300,000. On that date, the partnership liquidates and makes a proportionate distribution of the following assets to Josh.
Partnership's Basis in Asset Asset's Fair Market Value
Cash $ 70,000 $ 70,000
Inventory 120,000 150,000
a. Calculate Josh's recognized gain or loss on the liquidating distribution, if any.
b. How would your answer to a. change if the partnership also distributed a small parcel of land it had held for investment to Josh? Assume the land has a $5,000 adjusted basis (FMV is $8,000) to the partnership.

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Definitions:

Record

A documented account of financial transactions or occurrences.