In a Proportionate Liquidating Distribution, Ashleigh Receives a Distribution of $30,000

question 83

Multiple Choice

In a proportionate liquidating distribution, Ashleigh receives a distribution of $30,000 cash, accounts receivable (basis of $0, fair market value of $40,000) , and land (basis of $40,000, fair market value of $50,000) . In addition, the partnership repays all liabilities, of which Ashleigh's share was $70,000. Ashleigh's basis in the entity immediately before the distribution was $60,000. As a result of the distribution, what is Ashleigh's basis in the accounts receivable and land, and how much gain or loss does she recognize?

• A)$0 basis in accounts receivable; $0 basis in land; $40,000 gain.
• B)$0 basis in accounts receivable; $30,000 basis in land; $0 gain or loss.
• C)$0 basis in accounts receivable; $40,000 basis in land; $0 gain or loss.
• D)$40,000 basis in accounts receivable; $20,000 basis in land; $0 gain.
• E)$40,000 basis in accounts receivable; $20,000 basis in land; $100,000 gain.

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Definitions:

Neurotic Need

Excessive, compulsive desires that occur in an individual due to psychological conflicts or anxieties.

Unconscious Forces

The underlying, often hidden, motivations and desires that influence thoughts, feelings, and behaviors, according to psychoanalytic theory.

Situational Variables

External factors or conditions that can influence the outcome of research or the behavior of individuals in a given context.

Erikson

Refers to Erik Erikson, a developmental psychologist known for his theory on the psychosocial stages of human development.