In a Proportionate Liquidating Distribution, Ashleigh Receives a Distribution of $30,000

question 83

Multiple Choice

In a proportionate liquidating distribution, Ashleigh receives a distribution of $30,000 cash, accounts receivable (basis of $0, fair market value of $40,000) , and land (basis of $40,000, fair market value of $50,000) . In addition, the partnership repays all liabilities, of which Ashleigh's share was $70,000. Ashleigh's basis in the entity immediately before the distribution was $60,000. As a result of the distribution, what is Ashleigh's basis in the accounts receivable and land, and how much gain or loss does she recognize?

• A)$0 basis in accounts receivable; $0 basis in land; $40,000 gain.
• B)$0 basis in accounts receivable; $30,000 basis in land; $0 gain or loss.
• C)$0 basis in accounts receivable; $40,000 basis in land; $0 gain or loss.
• D)$40,000 basis in accounts receivable; $20,000 basis in land; $0 gain.
• E)$40,000 basis in accounts receivable; $20,000 basis in land; $100,000 gain.

---

Definitions:

Gas Law

Mathematical relationships that describe the behavior of gases, relating pressure, volume, temperature, and amount of gas.

Sodium Azide

A chemical compound with the formula NaN3, used as a preservative in labs and as a propellant in airbag inflators.

Airbags

Safety devices in vehicles designed to inflate rapidly during a collision to prevent injuries to passengers.

Combined Gas Law

A gas law that combines Charles's law, Boyle's law, and Gay-Lussac's law, describing the relationship among the pressure, volume, and temperature of a fixed amount of gas.