Matt Receives a Proportionate Nonliquidating Distribution

question 55

Multiple Choice

Matt receives a proportionate nonliquidating distribution. At the beginning of the partnership year, the basis of his partnership interest is $60,000. During the year, he received a cash distribution of $25,000 and a property distribution (basis of $20,000 and fair market value of $12,000) . In addition, Matt's share of partnership liabilities was reduced by $20,000 during the year. How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest?

• A) $3,000 loss; $12,000 basis in property; $0 remaining basis.
• B) $0 gain or loss; $15,000 basis in property; $0 remaining basis.
• C) $0 gain or loss; $20,000 basis in property; $15,000 remaining basis.
• D) $0 gain or loss; $12,000 basis in property; $23,000 remaining basis.
• E) $5,000 gain; $20,000 basis in property; $0 remaining basis.

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Definitions:

Sales Mix

The combination or ratio of different products or services that a company sells, impacting its profitability.

Distribution of Sales

The analysis or allocation of sales among different categories, regions, or periods to understand the pattern or strategy of sales.

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, indicating how much it contributes towards covering fixed costs and generating profit.

Sales Revenues

The income received by a company from its sales of goods or the provision of services, before any expenses are deducted.