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

question 49

Multiple Choice

Beth has an outside basis of $100,000 in the BJDE 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 $5,000. 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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Definitions:

Clarification

The process of making something clear or understandable by providing more details or simplifying the explanation.

Reflection

Reflection refers to the return of light, heat, sound, or energy from a surface, or the act of serious thought or consideration.

Clarification

A process of making something less confusing or more comprehensible by providing more details or explanation.

Industrial Diseases

Illnesses and conditions that are a direct result of work or occupational environment.