Before Receiving a Liquidating Distribution, Kathy's Basis in Her Interest

question 96

Multiple Choice

Before receiving a liquidating distribution, Kathy's basis in her interest in the KLM Partnership is $30,000. The distribution consists of $5,000 in money, inventory having a $1,000 basis to the partnership and a $2,000 FMV, and two parcels of undeveloped land (not held as inventory) having basis of $3,000 and $9,000 to the partnership with FMVs of $5,000 and $12,000, respectively. What is Kathy's basis in each parcel of land?

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Definitions:

Responsibility Reporting System

The preparation of reports for each level of responsibility in the company’s organization chart.

Static Budget

A fixed budget that does not change or adapt based on any variations in a company's activity levels or performance.

Flexible Budget

A budget that adjusts or varies with changes in volume, activity, or other relevant factors.

Responsibility Accounting

A system of accounting that involves assigning revenues and costs to the managers responsible for their incurrence, promoting accountability.