Carlos Has a Basis in His Partnership Interest of $30,000

question 50

Multiple Choice

Carlos has a basis in his partnership interest of $30,000. He receives a current distribution of $6,000 cash, unrealized receivables (FMV $11,000, basis $10,000) , inventory (FMV $8,000, basis $4,000) , land held as an investment (FMV $7,000, basis, $6,000) , and building (FMV $21,000, basis $9,000) . The partners' relative interests in the Sec. 751 assets do not change as a result of the current distribution. Carlos's basis in the building is

• A) $6,000.
• B) $9,000.
• C) $7,500.
• D) $2,500.

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Definitions:

Merchandise On Account

Goods that have been purchased but not yet paid for, often resulting in an accounts payable for the buyer.

Sales Allowance

A reduction in the selling price of goods or services, typically granted to customers for various reasons like minor defects or dissatisfaction.

Partial Derecognition

The process in accounting where only a portion of a financial asset or liability is removed from the balance sheet.

Receivables

These are amounts owed to a business by its customers for goods or services delivered on credit.