Nadine Fimple Is a One-Third Partner in the NWL Partnership

question 61

Essay

Nadine Fimple is a one-third partner in the NWL Partnership with equal inside and outside bases.On January 1,NWL distributes $100,000 to Nadine in complete liquidation of her FPL interest.NWL's balance sheet as of January 1 is as follows:
$\begin{array}{rr}\text { Basis } & \text { FMV } \\\text { Cash}&\$ 120,000 & \$ 120,000 \\\text { Inventory}&60,000 & 180,000 \\\hline \text { Total}&\$ 180,000 & \$ 300,000\end{array}$    
$\begin{array}{l}\begin{array}{l}\text { Nadine, capital } \\\text { Wendell, capit } \\\text { Louis, capital } \\\text { Total }\end{array}\begin{array}{r}\$ \quad 60,000 \\60,000 \\60,000 \\\hline \$ \quad 180,000 \\\hline\end{array}\end{array}$ What is the amount and character of Nadine's recognized gain or loss on the distribution?

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Definitions:

Full Employment Level

A situation in which all available labor resources are being used in the most economically efficient way, essentially meaning that unemployment is at the lowest possible level without causing inflation.

Keynesians

Economists or the economic theory advocating for government intervention in the economy, especially fiscal policy, to manage demand and address unemployment.

Say's Law

A principle that asserts supply creates its own demand, suggesting that producing goods and services generates the means and willingness to purchase other goods and services.

Economy Produces

Refers to the total output of goods and services generated by an economy within a specific period.