Daniela Is a 25% Partner in the JRD Partnership

question 38

Multiple Choice

Daniela is a 25% partner in the JRD Partnership. On January 1, JRD makes a proportionate, liquidating distribution of $16,000 cash, inventory with a $16,000 fair value (inside basis $8,000) , and accounts receivable with a fair value of $8,000 (inside basis of $12,000) to Daniela. JRD has no liabilities at the date of the distribution. Daniela's basis in her JRD partnership interest is $20,000. What is the amount and character of Daniela's gain or loss from the distribution?

• A) $0.
• B) $16,000 ordinary income.
• C) $16,000 capital gain.
• D) $20,000 capital gain.

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Definitions:

Pulmonary Trunk

The major vessel that carries blood from the heart to the lungs for oxygenation.

Right Ventricle

The chamber within the heart that is responsible for pumping oxygen-depleted blood to the lungs.

Azygos Vein

A vein running up the right side of the thoracic vertebral column, draining blood from the chest walls and upper lumbar region into the superior vena cava.

Axillary Vein

A large blood vessel that conveys blood from the lateral aspect of the thorax, axilla (armpit), and upper limb towards the heart.