Mack Has a Basis in a Partnership Interest of $200,000

question 104

Multiple Choice

Mack has a basis in a partnership interest of $200,000, including his share of partnership debt. At the end of the current year, the partnership distributed to Mack, in a proportionate nonliquidating distribution, cash of $20,000, inventory (basis to the partnership of $30,000 and fair market value of $40,000) , and land (basis to the partnership of $40,000 and fair market value of $42,000) .In addition, Mack's share of partnership debt decreased by $12,000 during the year. What basis does Mack take in the inventory and land and in the partnership interest (including debt share) following the distribution?

• A)$30,000 basis in inventory; $40,000 basis in land, $98,000 basis in partnership.
• B)$30,000 basis in inventory; $42,000 basis in land, $110,000 basis in partnership.
• C)$40,000 basis in inventory; $40,000 basis in land, $86,000 basis in partnership.
• D)$40,000 basis in inventory; $42,000 basis in land, $98,000 basis in partnership.
• E)$40,000 basis in inventory; $42,000 basis in land, $110,000 basis in partnership.

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Definitions:

Financial Advisors

Professionals who provide guidance to individuals and organizations on how to manage their finances, including investments, insurance, and retirement planning.

Anosognosia

A condition in which a person is unaware of their own mental health condition or cannot perceive their condition accurately.

Money Management

Money Management is the process of budgeting, saving, investing, spending, or otherwise overseeing the capital usage of an individual or group.

Rationalization

A psychological strategy where disputable actions or emotions are rationalized in an apparently logical way to evade the actual reasoning.