Nadine Fimple Is a One-Half Partner in the NL Partnership

question 83

Short Answer

Nadine Fimple is a one-half partner in the NL Partnership with equal inside and outside bases. On January 1, NL distributes accounts receivable with a fair value of $100,000 to Nadine as an operating distribution. NL's balance sheet as of January 1 is as follows: $$\begin{array} { l r r } & \underline { \text { Basis } } & \underline { \text { FMV } } \\\text { Cash } & \mathbf { \$ 1 0 0 , 0 0 0 } & \mathbf { \$ 1 0 0 , 0 0 0 } \\\text { Accounts receivable } & \underline { { - 0 } - } & \underline { \mathbf { 1 0 0 , 0 0 0 } } \\\text { Total } & \underline { \mathbf { \$ 1 0 0 , 0 0 0 } } & \underline { \mathbf { \$ 20 0 , 0 0 0 } } \\& & \\\text { Nadine, capital } & \mathbf { \$ 5 0 , 0 0 0 } & \\\text { Louis, capital } & \underline { \mathbf { 5 0 , 0 0 0 } } & \\\text { Total } & \underline { \mathbf { \$ 10 0 , 0 0 0 } } &\end{array}$$ What is the amount and character of Nadine's recognized gain or loss on the distribution?

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