Tatia's Basis in Her TRQ Partnership Interest Is $33,000

question 98

Essay

Tatia's basis in her TRQ partnership interest is $33,000. Tatia receives a distribution of $22,000 cash from TRQ in complete liquidation of her interest. The three partners in TRQ share profits, losses, and capital equally. TRQ has the following balance sheet: $\begin{array}{lrr}\text { Assets: } & \underline{\text { Basis }} & \underline{\text { FMV }} \\\text { Cash } & \mathbf{\$ 2 2 , 0 0 0} & \$ \mathbf{2 2 , 0 0 0} \\\text { Stock (investment) } & 11,000 & 22,000 \\\text { Land } & \underline{66,000} & \underline{22,000} \\\text { Totals } & \underline{\underline{\$ 99,000}} & \underline{\underline{\$ 66,000}}\end{array}$

$\begin{array}{l}\text { Liabilities and capital: }\\\begin{array}{cr}\text { Capital - Tatia } &&&& 33,000 \\\text { - Rihanna } &&&& 33,000 \\\text { - Quinn } &&&& \underline{33,000} \\\text { Totals } &&&& \$ 99000\end{array}\end{array}$ a. What is the amount and character of Tatia's recognized gain or loss? What is the effect on the partnership assets?
b. If TRQ has a §754 election in place, what is the amount of the special basis adjustment?

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