Misha Receives a Proportionate Current (Nonliquidating) Distribution When the Basis

question 113

Multiple Choice

Misha receives a proportionate current (nonliquidating) distribution when the basis of his partnership interest is $60,000. The distribution consists of $80,000 cash and inventory (adjusted basis to the partnership of $10,000, fair market value of $20,000) . How much gain or loss does Misha recognize, and what is his basis in the distributed inventory and in the partnership interest following the distribution?

• A) $0 gain or loss; $10,000 basis in inventory; $0 basis in partnership interest.
• B) $0 gain or loss; $20,000 basis in inventory; $50,000 basis in partnership interest.
• C) $20,000 capital gain; $0 basis in inventory; $0 basis in partnership interest.
• D) $20,000 capital gain; $10,000 basis in inventory; $0 basis in partnership interest.
• E) $20,000 ordinary income; $0 basis in inventory; $20,000 basis in partnership interest.

---

Definitions:

Void

Describes a contract or legal agreement that has no legal force or effect, making it unenforceable from the outset.

Misrepresentation

The act of providing false, misleading, or incomplete information with the intention of deceiving.

Batmobile

The fictional car driven by the DC Comics superhero Batman, known for its advanced technology and capabilities.

Remedy

A means of obtaining redress or resolution to a breach of contract, harm, or wrongful act within the legal system.