Brittany Receives a Nonliquidating Distribution of $48,000 Cash from Her

question 867

Multiple Choice

Brittany receives a nonliquidating distribution of $48,000 cash from her partnership. Brittany's basis in her partnership interest prior to the distribution is $25,000. What are the tax consequences of the distribution?

• A) $48,000 nontaxable return of capital, ($23,000) partnership basis
• B) $25,000 nontaxable return of capital, capital gain of $23,000, $0 partnership basis
• C) $48,000 ordinary income; $25,000 partnership basis
• D) $25,000 nontaxable return of capital, ordinary income of $23,000, $0 partnership basis

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Definitions:

Skills and Confidence

The combination of abilities and self-assurance that enables an individual to perform tasks effectively and believe in their capacities.

Subordinate Jobs

Positions within an organization that fall below the managerial or leadership levels, typically involving more direct task execution under supervision.

Substantial Delegation

refers to transferring a considerable amount of decision-making power or responsibility from superiors to subordinates in an organization.

Work Unit

A work unit is a group of individuals within an organization tasked with specific responsibilities or objectives.