The Dominguez Partnership Has the Following Assets on December 31

question 42

Multiple Choice

The Dominguez Partnership has the following assets on December 31: $\begin{array}{lrr}&\underline{\text { Basis }}&\underline{\text { Fair Market Value }}\\\text { Cash } & \$ 10,000 & \$ 10,000 \\\text { Receivables } & 5,000 & 10,000 \\\text { Inventory } & 20,000 & 30,000\end{array}$
Antonio is a 20 percent partner and has a $7,000 basis in his partnership interest.The partnership has no liabilities.Antonio receives a liquidating distribution of $10,000 cash.What is the amount and character of the gain or income Antonio recognizes on this liquidating distribution?

• A)0
• B)$1,000
• C)$2,000
• D)$3,000

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Definitions:

Hepatic Portal Vein

A blood vein that carries nutrients from the gastrointestinal tract and spleen to the liver for processing.

Capillaries

The smallest blood vessels in the body's circulatory system, where the exchange of water, oxygen, carbon dioxide, and many other nutrients and waste substances between blood and tissues occurs.

Hepatic Artery

The artery that supplies oxygenated blood to the liver from the heart.

Amylase

An enzyme that helps in breaking down carbohydrates into simpler sugars, mainly found in saliva and pancreatic fluid.