BPA Partnership Is an Equal Partnership in Which Each of the Partners

question 28

Essay

BPA Partnership is an equal partnership in which each of the partners has a basis in her partnership interest of $20,000.BPA reports the following balance sheet:
$\begin{array}{llll} \text { } & \text {Basis } & \text {FMV } \\ \text { Inventory } &\$40,000&\$60,000\\ \text {Land } &\underline{20,000}&\underline{30,000}\\ \text { Total } &\underline{\$60,000}&\underline{\$90,000}\\\end{array}$

$$\begin{array} { l r } \text { Brooke, capital } & \$ 20,000 \\\text { Penelope, capital } & 20,000 \\\text { Amanda, capital } & \underline{20,000} \\\text { Total } & \underline{\$ 60,000}\end{array}$$ a.Identify the hot assets if Brooke decides to sell her interest in BPA.
b.Are these assets "hot" for purposes of distributions?
c.If BPA distributes the land to Brooke in complete liquidation of her partnership interest, what tax issues should be considered?

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Definitions:

Average Selling Price

The average price at which a particular product is sold across different markets or channels.

Decreased By

A mathematical operation indicating subtraction or reduction in quantity or amount.

Decrease

A decrease refers to a reduction in size, number, value, or amount of a particular item or entity over time.

Percent Less

A term used to indicate a reduction in amount or rate by a specified percentage.