Two Years Ago,Tom Contributed Investment Land with a Basis of $50,000

question 12

Essay

Two years ago,Tom contributed investment land with a basis of $50,000 and FMV of $62,000 to the RST Partnership.This year,Tom has a basis in his partnership interest of $53,000 when he receives a current distribution of $14,000 cash and inventory with a basis of $35,000 and FMV of $52,000.(There is no Sec.751 exchange in connection with the inventory distribution. )The partnership continues to hold the land Tom contributed.How much gain (if any)must Tom recognize as a result of this distribution?

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Definitions:

Profitability Measure

A financial metric used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.

Common Stockholder's Equity

This represents the ownership interest of common shareholders in a company, calculated as total assets minus total liabilities and preferred stock equity.

Net Income

A company's remaining income after deducting all expenses and taxes from its revenue.

Accounts Receivable Turnover

Accounts receivable turnover is a financial ratio that measures how effectively a company is collecting on its credit sales by comparing net credit sales with the average accounts receivable for a period.