Melissa Is a Partner in a Continuing Partnership

question 20

Essay

Melissa is a partner in a continuing partnership.At the end of the current year, the partnership makes a proportionate, nonliquidating distribution to Melissa of $50,000 cash, inventory (basis of $22,000, fair market value of $20,000), and land (basis of $30,000, fair market value of $60,000).Melissa's basis in the partnership interest was $90,000 before the distribution.What is Melissa's basis in the inventory, land, and partnership interest following the distribution?

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Definitions:

Check Register

A record book or digital log used to track checks written, deposited funds, and current account balances.

Voucher Journal

A record that details every financial transaction of a business, paired with the documentation that supports the transaction as a part of the accounting system.

Voucher System

A control mechanism in accounting that ensures all purchases and expenditures are properly authorized before payment is made.

Petty Cash Fund

A small amount of cash kept on hand for minor or incidental expenses.