M and E Are Equal Partners in the ME Partnership

question 21

Multiple Choice

M and E are equal partners in the ME Partnership.E decides to leave the partnership and receives a liquidating distribution of $15,000 cash and two items of inventory.Inventory R has a basis of $1,000 and a fair market value of $7,000 and inventory S has a basis of $2,000 and a fair market value of $5,000.E's adjusted basis for her partnership interest is $40,000.In addition to the cash and inventory, E also receives two parcels of land that are investments assets.Parcel A has a basis to the partnership of $12,000 and a fair market value of $16,000.Parcel B has a basis to the partnership of $20,000 and a fair market value of $18,000.What is E's basis in Parcel A and Parcel B? Assume that this distribution is proportionate.

• A)Parcel A's basis is $8,800; Parcels B's basis is $13,200.
• B)Parcel A's basis is $12,000; Parcels B's basis is $20,000.
• C)Parcel A's basis is $12,000; Parcels B's basis is $18,000.
• D)Parcel A's basis is $11,000; Parcels B's basis is $11,000.

---

Definitions:

Low-Level Drug Dealer

An individual who sells illegal drugs in small quantities, often working at the bottom of the drug distribution chain.

Minimum Wage

The lowest legally permissible amount that workers can be paid for their labor, designated by government law or regulation.

Part-Time Work

Employment characterized by working fewer hours than those considered full-time, often offering greater flexibility but less job security and benefits.

Intimate Partner Violence

Violence or abuse by one person against their partner in an intimate relationship, encompassing physical, sexual, emotional, and psychological abuse.