Charlie Receives a Proportionate, Nonliquidating Distribution from the Forest Partnership

question 8

Multiple Choice

Charlie receives a proportionate, nonliquidating distribution from the Forest Partnership.The distribution consists of $20,000 cash and property with an adjusted basis to the partnership of $40,000 and a fair market value of $68,000.Immediately before the distribution, Charlie's adjusted basis for her partnership interest is $85,000.Charlie's basis in the noncash property received is:

• A)$20,000.
• B)$40,000.
• C)$65,000.
• D)$68,000.
• E)None of the above.

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Definitions:

Accounting

the systematic process of recording, analyzing, and reporting financial transactions for a business or individual.

Financial Management

The efficient and effective management of money in such a manner as to accomplish the objectives of the organization.

Fixed Assets

Long-term tangible assets, such as buildings, machinery, and equipment, that a company uses in its operations and is not expected to consume or sell within a year.

Long-Term Solvency

A measure of a company's ability to meet its long-term financial obligations and continue its operations into the foreseeable future.