Anthony's Basis in the WAM Partnership Interest Was $200,000 Just

question 9

Multiple Choice

Anthony's basis in the WAM Partnership interest was $200,000 just before he received a proportionate liquidating distribution consisting of investment land (basis of $90,000, fair market value of $100,000) , and inventory (basis of $30,000, fair market value of $70,000) . After the distribution, Anthony's recognized gain or loss and his basis in the land and inventory are:

• A) $80,000 loss; $90,000 (land); $30,000 (inventory).
• B) $70,000 loss; $100,000 (land); $30,000 (inventory).
• C) $30,000 loss; $100,000 (land); $70,000 (inventory).
• D) $30,000 loss; $90,000 (land); $30,000 (inventory).
• E) $0 gain or loss; $170,000 (land); $30,000 (inventory).

---

Definitions:

After-Tax Discount Rate

The rate used to discount future cash flows to their present value, taking into account the impact of taxes.

Income Tax Rate

The portion of one's income that is handed over to the state as taxation.

Straight-Line Depreciation

A manner for allocating the expense of a material asset across its functional life in even yearly figures.

Renovation Cost

Expenses associated with upgrading or restoring the structure, functionality, or appearance of a property.