Heidi and Teresa Are Equal Partners in the HT Partnership

question 92

Essay

Heidi and Teresa are equal partners in the HT Partnership. The partners formed the partnership seven years ago by contributing cash. Prior to any distributions, the partners each have a $50,000 basis in their partnership interests. On December 31, the partnership makes a pro rata operating distribution to Heidi of $60,000 cash. What is the amount and character of Heidi's recognized gain or loss? What is Heidi's remaining basis in HT?

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Definitions:

New Jersey Plan

A proposal at the Constitutional Convention favoring a unicameral legislature with equal representation for each state, regardless of population size.

Virginia Plan

A proposal by Virginia delegates for a bicameral legislative branch during the drafting of the United States Constitution in 1787.

Declaration of Independence

A foundational document adopted on July 4, 1776, in which the thirteen American colonies declared their independence from British rule.

Revolutionary War

The Revolutionary War, also known as the American Revolution, was the conflict between thirteen American colonies and British rule that led to the formation of the United States of America after the colonies won their independence.