Ariel Receives from Her Partnership a Nonliquidating Distribution of $9,000

question 118

Multiple Choice

Ariel receives from her partnership a nonliquidating distribution of $9,000 cash plus a parcel of land. The partnership had purchased the land five years ago for $20,000, but it is worth $28,000 at the time of the distribution. Ariel's predistribution basis is $17,000. How much income will Ariel recognize due to the distribution, and what is her basis in the land?

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Definitions:

Foreign Currency

Currency used in a country other than the domestic one, impacting transactions, accounting, and financial reporting.

Extraordinary Items

Unusual and infrequent gains or losses that are reported separately on a company's income statement.

Uncollectible Accounts

Accounts receivable that a company is unable to collect, often leading to a write-off as a bad debt expense.

Expropriation

The governmental seizure of private property without the owner's consent, often with compensation.