Before Receiving a Liquidating Distribution,Kathy's Basis in Her Interest in the KLM

question 77

Multiple Choice

Before receiving a liquidating distribution,Kathy's basis in her interest in the KLM Partnership is $30,000.The distribution consists of $5,000 in money,inventory having a $1,000 basis to the partnership and a $2,000 FMV,and two parcels of undeveloped land (not held as inventory) having basis of $3,000 and $9,000 to the partnership with FMVs of $5,000 and $12,000,respectively.What is Kathy's basis in each parcel of land?

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Definitions:

Eligible Dividends

Dividends designated by a corporation to be eligible for a reduced tax rate in the hands of individual Canadian shareholders.

Interest Income

Income earned from deposit accounts or investments through the receipt of interest payments.

Quebec

A province in eastern Canada known for its French heritage, culture, and language.

Marginal Tax Rates

The rate at which the next dollar of taxable income would be taxed, applied within a progressive income tax system.