The December 31, 2016, Balance Sheet of the BCD LLP

question 131

Essay

The December 31, 2016, balance sheet of the BCD LLP reads as follows. $\begin{array}{lrr}&\text { Adjusted}\\&\text { Basis}&\text { FMV}\\\text { Cash } & \$ 210,000 & \$ 210,000 \\\text { Receivables } & -0- & 120,000 \\\text { Capital assets } & 42,000 &{6 9 , 0 0 0} \\\text { Total } & \mathbf{\$ 2 5 2 , 0 0 0} & \mathbf{\$ 3 9 9 , 0 0 0}\\\\\text { Ben, capital } & \$ 84,000 & \$ 133,000 \\\text { Christina, capital } & 84,000 & 133,000 \\\text { Danielle, capital } & 84,000 & 133,000 \\\text { Total } & \underline{\$ 252,000} & \underline{\$ 399,000} \\\end{array}$ Each partner shares in 1/3 of the partnership capital, income, gain, loss, deduction, and credit. Capital is not a material income-producing factor to the partnership. On December 31, 2016, Christina (treated as a general partner) receives a distribution of $140,000 cash in liquidation of her partnership interest under § 736. Nothing is stated in the partnership agreement about goodwill. Christina's outside basis for the partnership interest immediately before the distribution is $84,000.
How much is Christina's recognized gain from the distribution and what is the character of the gain?

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Definitions:

Process Innovation

The implementation of a new or significantly improved production or delivery method, enhancing efficiency or quality.

Organizational Cultural Lag

The delay between changes in organizational culture and the adaptation of its strategies, processes, or structure.

Amabile's Model

A theory proposed by Teresa Amabile that outlines the impact of intrinsic motivation, domain-relevant skills, and creativity-relevant processes on an individual's creative output.

Support for Creativity

The encouragement and facilitation of innovative thinking and original ideas within an organization or community.