Eicho's Interest in the DPQ Partnership Is Terminated When Her

question 97

Essay

Eicho's interest in the DPQ Partnership is terminated when her basis in the partnership is $70,000. She receives a liquidating distribution of $20,000 cash and inventory with a $24,000 basis and a $40,000 FMV. She also receives, as part of the distribution, a desk that has a $100 basis and a $200 FMV to the partnership. What is her gain or loss, and what is her basis in the items received?

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Definitions:

Sticky-Price Theory

The economic theory that prices of goods do not adjust immediately to changing economic conditions, leading to periods of economic inefficiency.

Menu Costs

The costs of changing prices.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, serving as an indicator of inflation or deflation.

Aggregate Quantity

The total amount or sum of goods and services produced or supplied in an economy at a given overall price level during a specific time period.