The PW Partnership's Balance Sheet Includes the Following Assets Immediately

question 26

Multiple Choice

The PW partnership's balance sheet includes the following assets immediately before it liquidates: $\begin{array}{lrr}&\underline{Basis}&\underline{FMV}\\\text { Cash } & \$ \mathbf{\$ 1 0 , 0 0 0} & \$ \mathbf{\$ 1 0 , 0 0 0} \\\text { Unrealized receivables } & \underline{-0-} & \underline{\mathbf{\$ 2 0 , 0 0 0}} \\\text { Total } &\underline{\underline{{\mathbf{\$ 1 0 , 0 0 0}}}}& \underline{\underline{\$20,000}}\end{array}$ In complete liquidation PW distributes the cash to Pamela and the unrealized receivables to Wade (equal partners) . Pamela and Wade each have an outside basis in PW equal to $5,000. PW has no liabilities at the time of the liquidation. What is the amount and character of Wade's recognized gain or loss?

• A) $0
• B) $5,000 capital gain
• C) $5,000 ordinary income
• D) $2,500 capital gain and $2,500 ordinary income

---

Definitions:

Amputation

The surgical removal of a limb or extremity of the body, often performed to remove diseased tissue or relieve pain.

Cortex's Response

Describes the reaction or activity in the cerebral cortex of the brain in response to a stimulus or situation.

Collateral Stimulation

The activation of additional pathways or neurons surrounding the main pathway being stimulated, enhancing the response.

Dendritic Morphology

The study of the structure and form of dendrites, which are the branched projections of a neuron.