Doris Owns a One-Third Capital and Profits Interest in the Calendar-Year

question 29

Essay

Doris owns a one-third capital and profits interest in the calendar-year DB Partnership.Her adjusted basis for her partnership interest on July 1 of the current year is $20,000.On that date, she receives an operating distribution of her share of partnership assets shown below:
$$\begin{array}{l}\quad \quad \text { Partrership's Basis in}\\\begin{array} { c r c c } &\text { Asset } & { \text { Asset's Fair Market Value } } \\\text { Cash}&\$ 81,000 & \$ 81,000 \\\text { Inventory}& 36,000 & 24,000 \\\text { Land} & 120,000 & 135,000\end{array}\end{array}$$ What is the amount and character of Doris's gain or loss on the distribution? What is her basis in the distributed assets?

Understand the classification of cash receipts and payments in the direct method of preparing a statement of cash flows.

Determine the cash effects of transactions and events related to investing and financing activities.

Calculate the ending cash balance given the beginning balance and cash flows from operating, investing, and financing activities.

Analyze changes in current assets and current liabilities to adjust net income for non-cash transactions and changes in operating capital.

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Definitions:

Erosion

The process by which soil, rock, or dissolved material is worn away and removed from one location to another by wind, water, or other natural agents.

Polyvarietal Cultivation

The agricultural practice of growing multiple varieties of the same crop in a given area to increase genetic diversity and reduce disease risk.

Salt Build-Up

The accumulation of soluble salts in soil, often as a result of irrigation in arid and semi-arid regions.