Jonathon Owns a One-Third Interest in a Liquidating Partnership

question 217

Multiple Choice

Jonathon owns a one-third interest in a liquidating partnership. Immediately before the liquidation, Jonathon's basis in the partnership interest is $60,000. The partnership distributes cash of $32,000 and two parcels of land (each with a fair market value of $10,000) . Parcel A has a basis of $2,000 to the partnership and Parcel B has a basis of $6,000. Jonathon's basis in the two parcels of land is:

• A) Parcel A, $2,000? Parcel B, $6,000.
• B) Parcel A, $7,000? Parcel B, $21,000.
• C) Parcel A, $10,000? Parcel B, $10,000.
• D) Parcel A, $14,000? Parcel B, $14,000.
• E) Parcel A, $15,000? Parcel B, $45,000.

---

Definitions:

Work In Process Inventory

Items that are in the production process but have not yet been completed, representing one of the three main inventory accounts.

First-In, First-Out

An inventory costing method where the goods first added to the inventory are the first to be sold, reflecting in more current inventory costs in financial statements.

Brazing Department

A specific section within a manufacturing facility where brazing, a metal-joining process, is carried out.

Conversion Costs

Expenses directly related to the transformation of raw materials into finished goods, typically including both labor and manufacturing overhead.