Heidi and Teresa Are Equal Partners in the HT Partnership

question 92

Essay

Heidi and Teresa are equal partners in the HT Partnership. The partners formed the partnership seven years ago by contributing cash. Prior to any distributions, the partners each have a $50,000 basis in their partnership interests. On December 31, the partnership makes a pro rata operating distribution to Heidi of $60,000 cash. What is the amount and character of Heidi's recognized gain or loss? What is Heidi's remaining basis in HT?

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Definitions:

Henry Cabot Lodge

An American Republican Senator known for his opposition to the Treaty of Versailles and the League of Nations after World War I.

US Ambassador

An official representative of the President of the United States accredited to a foreign government or international organization.

Saigon

Formerly the capital of South Vietnam, now known as Ho Chi Minh City, it was a focal point during the Vietnam War.

Communist

Pertaining to a political and economic ideology aiming for a classless society in which all property is publicly owned and each person works and is paid according to their abilities and needs.