Ten Years Ago, Latesha Acquired a One-Third Interest in Dana

question 53

Multiple Choice

Ten years ago, Latesha acquired a one-third interest in Dana Associates, a partnership, for $26,000 cash. This year, Latesha's entire interest in the partnership is liquidated when her basis is $24,000. Dana's assets consist of the following: cash, $20,000; inventory with a basis of $46,000 and an FMV of $40,000. Dana has no liabilities. Latesha receives the cash of $20,000 in liquidation of her entire interest. What is Latesha's recognized loss on the liquidation of her interest in Dana?

• A)$0
• B)$4,000 long-term capital loss
• C)$4,000 short-term capital loss and $2,000 ordinary loss
• D)$4,000 long-term capital loss and $2,000 ordinary loss

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Definitions:

Bulimia

An eating disorder characterized by binge eating followed by purging.

Enormous Amounts

Refers to quantities vastly exceeding what is usual, expected, or manageable.

Psychological Mechanisms

The underlying processes, structures, or components of the mind that drive behaviors and responses to internal and external stimuli.

Physiological Mechanisms

The biological functions and processes that operate within an organism to maintain homeostasis and enable survival.