Katrina Is a One-Third Partner in the KYR Partnership (Calendar

question 6

Essay

Katrina is a one-third partner in the KYR partnership (calendar year-end). Katrina decides she wants to exit the partnership and receives a proportionate distribution to liquidate her partnership interest on January 1. The partnership has no liabilities and holds the following assets as of January 1: $$\begin{array} { l r r } & \underline { \text { Basis } } & \underline { \text { FMV } } \\\text { Cash } & \mathbf { \$ 1 8 0 , 0 0 0 } & \mathbf { \$ 1 8 0 , 0 0 0 } \\\text { Accounts receivable } & - 0 - & \mathbf { 2 4 0 , 0 0 0 } \\\text { Stock investment } & \mathbf { 7 5 , 0 0 0 } & \mathbf { 1 2 0 , 0 0 0 } \\\text { Land } & \underline { \mathbf { 3 0 0 , 0 0 0 } } & \underline { \mathbf { 3 6 0 , 0 0 0 } } \\\text { Totals } & \underline { \mathbf { 5 5 5 , 0 0 0 } } & \underline { \$ 900,000 }\end{array}$$ Katrina receives one-third of each of the partnership assets. She has a basis in her partnership interest of $110,000. What is the amount and character of any recognized gain or loss to Katrina? What is Katrina's basis in the distributed assets?

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Definitions:

Arachnoid Mater

A delicate membrane that encompasses the brain and spinal cord, situated between the dura mater and the pia mater, part of the meninges.

Dura Mater

The outermost, tough layer of the meninges that surround and protect the brain and spinal cord.

Outermost

Situated farthest away from the center or from a reference point.

Pia Mater

The delicate innermost layer of the meninges, the membranes surrounding the brain and spinal cord.