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

question 130

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

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Definitions:

One Family Member

A single person belonging to a family unit, which could imply specific roles, responsibilities, or the focus within family dynamics.

Diverse Cultures

A term referring to the wide range of cultural backgrounds, practices, values, and beliefs present within a population.

Natural Helping Systems

Informal networks of family, friends, and community members that offer support and assistance.

Minority Populations

Groups of people who are less in number compared to the majority group in a society, often characterized by differences in race, religion, ethnicity, or sexual orientation.