Mark Receives a Proportionate Current (Nonliquidating) Distribution

question 117

Multiple Choice

Mark receives a proportionate current (nonliquidating) distribution. At the beginning of the partnership year, the basis of his partnership interest is $100,000. During the year, he received a cash distribution of $40,000 and a property distribution (basis of $30,000, fair market value of $25,000) . In addition, Mark's share of partnership liabilities was reduced by $10,000 during the year. How much gain or loss does Mark recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest?

• A) $25,000 loss; $25,000 basis in property; $0 remaining basis.
• B) $30,000 loss; $30,000 basis in property; $0 remaining basis.
• C) $0 gain or loss; $25,000 basis in property; $25,000 remaining basis.
• D) $0 gain or loss; $30,000 basis in property; $20,000 remaining basis.
• E) $0 gain or loss; $30,000 basis in property; $30,000 remaining basis.

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Definitions:

Legally Recognized Injury

A wrong or damage suffered by an individual which is identified and acknowledged under the law for purposes of compensation or remedy.

Negligent Act

An action or failure to act in a situation where a person has a duty to exercise reasonable care, resulting in harm to another party.

Proportionate Negligence

A legal doctrine that allocates damage recovery based on the degree of fault or negligence contributed by each party involved in an incident.

Liability for Injuries

The legal responsibility to compensate for physical harm or injury caused to another person.