Jonathon Owns a One-Third Interest in a Liquidating Partnership

question 217

Multiple Choice

Jonathon owns a one-third interest in a liquidating partnership. Immediately before the liquidation, Jonathon's basis in the partnership interest is $60,000. The partnership distributes cash of $32,000 and two parcels of land (each with a fair market value of $10,000) . Parcel A has a basis of $2,000 to the partnership and Parcel B has a basis of $6,000. Jonathon's basis in the two parcels of land is:

• A) Parcel A, $2,000? Parcel B, $6,000.
• B) Parcel A, $7,000? Parcel B, $21,000.
• C) Parcel A, $10,000? Parcel B, $10,000.
• D) Parcel A, $14,000? Parcel B, $14,000.
• E) Parcel A, $15,000? Parcel B, $45,000.

---

Definitions:

Delegated Duty

A task or responsibility assigned by one party to another, usually within the scope of employment or contractual agreement.

Assignment

The act of passing on rights, property, or duties from one individual or group to another.

Creditor Beneficiary

A third party who benefits from a contract made between two other parties because one of the primary parties owes a debt to the beneficiary.

Contract

A legally enforceable agreement between two or more parties that creates mutual obligations.