Tom, Tina, Tatum, and Terry Are Equal Owners Treated as General

question 65

Multiple Choice

Tom, Tina, Tatum, and Terry are equal owners treated as general partners) in the 4-Ts LLC, a cash basis service entity. 4-Ts has unrealized receivables of $400,000 basis of $0) and no other hot assets. A goodwill payment of $50,000 per partner is provided for in the LLC's operating agreement. If 4-Ts distributes cash of $300,000 to Tom in liquidation of his LLC interest, which of the following statements is correct?

• A) This is a proportionate distribution with respect to hot assets.
• B) The $50,000 payment that relates to LLC goodwill cannot be deducted by the LLC.
• C) The partnership treats the $100,000 payment for Tom's share of unrealized receivables as part of Tom's § 736b) payment.
• D) The $150,000 § 736a) payment will result in a capital gain to Tom.
• E) The $200,000 § 736b) payment will be taxed to Tom as ordinary income.

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Definitions:

Weak Current

A relatively mild or gentle flow of water in a sea, river, or other body of water, which can influence local climates and marine transportation.

Steep Slopes

Land areas where the ground rises sharply, often leading to challenges in construction and increased risk of erosion.

Wind

The flow of gases on a large scale, primarily on Earth's surface, resulting from air moving from high pressure to low pressure areas.

Sedimentary Rocks

Rocks formed by the deposition and subsequent cementation of mineral or organic particles on the floor of oceans or other bodies of water.