Daniel's basis in the DAT Partnership is $135,000. DAT distributes its land to Daniel in complete liquidation of his partnership interest. DAT reports the following balance sheet just before the distribution:
If DAT has a §754 election in place, what is the amount and sign (positive or negative) of the special basis adjustment resulting from the distribution to Daniel? What is DAT's basis in its remaining assets?
Definitions:
Direct Materials
Raw materials that are directly traceable to the manufacturing of a product and are considered variable costs.
Factory Depreciation
The systematic reduction in the recorded cost of fixed assets (such as manufacturing equipment) to account for wear and tear or obsolescence over time.
Total Manufacturing Costs
The aggregate cost of direct material, direct labor, and manufacturing overhead incurred in producing goods.
Operating Expenses
Operating expenses consist of the costs related to a company's primary operational activities, excluding costs associated with manufacturing or production.
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