Beth Has an Outside Basis of $100,000 in the BTDE

question 174

Multiple Choice

Beth has an outside basis of $100,000 in the BTDE Partnership as of December 31 of the current year.On that date the partnership liquidates and distributes to Beth a proportionate distribution of $50,000 cash and inventory with an inside basis to the partnership of $10,000 and a fair market value of $16,000.In addition,Beth receives an antique desk (not inventory) which has an inside basis and fair market value of $0 and $5,000,respectively.None of the distribution is for partnership goodwill.How much gain or loss will Beth recognize on the distribution,and what basis will she take in the desk?

• A)$40,000 loss;$0 basis.
• B)$35,000 loss;$5,000 basis.
• C)$0 gain or loss;$5,000 basis.
• D)$0 gain or loss;$40,000 basis.
• E)None of the above.

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