In a Proportionate Liquidating Distribution, Scott Receives a Distribution of $20,000

question 82

Multiple Choice

In a proportionate liquidating distribution, Scott receives a distribution of $20,000 cash, accounts receivable (basis of $0 and fair market value of $40,000) , and land (basis of $30,000 and fair market value of $60,000) . In addition, the partnership repays all liabilities, of which Scott's share was $20,000. Scott's basis in the entity immediately before the distribution was $100,000. As a result of the distribution, what is Scott's basis in the accounts receivable and land, and how much gain or loss does he recognize?

• A) $0 basis in accounts receivable; $30,000 basis in land; $0 gain or loss.
• B) $0 basis in accounts receivable; $60,000 basis in land; $0 gain or loss.
• C) $40,000 basis in accounts receivable; $30,000 basis in land; $0 gain or loss.
• D) $40,000 basis in accounts receivable; $60,000 basis in land; $20,000 gain.
• E) $0 basis in accounts receivable; $80,000 basis in land; $20,000 loss.

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Definitions:

Expiratory Reserve Volume

The additional amount of air that can be forcibly exhaled after the completion of a normal, controlled exhalation.

Anatomic Dead Space

The portion of the respiratory system that conducts air but does not participate in gas exchange, including the nose, trachea, and bronchi.

Anatomic Dead Space

The portion of the respiratory system where gas exchange does not occur, including the trachea and bronchi.

Alveolar Dead Space

is the portion of the respiratory system where alveoli are ventilated but not perfused with blood, thus not participating in gas exchange.