Partner R Received a Current Distribution from the RST Partnership

question 38

Multiple Choice

Partner R received a current distribution from the RST Partnership consisting of $20,000 cash, $6,000 of partnership zero basis accounts receivables, and a capital asset (FMV $7,000 and basis $1,500) .The distribution did not change R's profit and loss sharing ratio.Immediately prior to the distribution, R's outside basis in his partnership interest was $25,000.After the distribution, what basis does R have in the receivables, the capital asset, and his partnership interest?

• A)Receivables $0, capital asset $1,500, and interest $3,500
• B)Receivables $0, capital asset $5,000, and interest $0
• C)Receivables $2,500, capital asset $2,500, and interest $0
• D)Receivables $6,000, capital asset $7,000, and interest $12,000
• E)Receivables $0, capital asset $1,500, and interest $23,500

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Definitions:

Stock Split

A corporate action that increases the number of a corporation's outstanding shares by dividing each share, which in turn reduces its price but not the total market capitalization.

Total Market Value

The aggregate value of a company or an asset in the marketplace, based on current prices and the total number of shares or units outstanding.

Stock Split

A corporate action where a company divides its existing stock into multiple shares to boost the liquidity of the shares.

Shares Outstanding

The cumulative amount of a company's shares that have been approved, distributed, and acquired by shareholders and currently possessed by them.