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.

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Definitions:

Unipolar Depression

A major depressive disorder characterized by a persistent feeling of sadness or a lack of interest in external stimuli, without the manic episodes evident in bipolar disorder.

Suicidal Ideation

Having thoughts about, considering, or planning suicide, which may range from fleeting thoughts to detailed planning.

Distractibility

The condition of being easily drawn away from the task at hand to unrelated thoughts or activities.

Inflated Self-esteem

An excessively high regard for one's own worth, abilities, or significance, which can sometimes cross into the territory of narcissism or exhibit as a symptom in bipolar disorder during manic phases.