Jacob Is a Partner in the JB Partnership with a Basis

question 40

Multiple Choice

Jacob is a partner in the JB Partnership with a basis in his partnership interest is $35,000.He receives a nonliquidating distribution of $25,000 cash and real property with a partnership basis of $18,000 and a fair market value of $30,000.How much taxable gain will Jacob recognize on the distribution?

• A)0
• B)$8,000
• C)$20,000
• D)$43,000

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Definitions:

NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period of time.

Interest Rates

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR).

After-Tax Annual Interest Savings

The amount of money saved annually on interest payments after accounting for the effects of taxes, often referenced in discussions of debt refinancing or consolidation.

Refunding

The process of replacing an existing debt with a new debt, often to take advantage of more favorable borrowing terms.