Josh Has a 25% Capital and Profits Interest in the Calendar-Year

question 30

Essay

Josh has a 25% capital and profits interest in the calendar-year GDJ Partnership. His adjusted basis for his partnership interest on October 15 of the current year is $300,000. On that date, the partnership liquidates and makes a proportionate distribution of the following assets to Josh.
Partnership's Basis in Asset Asset's Fair Market Value
Cash $ 70,000 $ 70,000
Inventory 120,000 150,000
a. Calculate Josh's recognized gain or loss on the liquidating distribution, if any.
a. change if the partnership also distributed a small parcel of land it had held for investment to Josh? Assume the land has a $5,000 adjusted basis (FMV is $8,000) to the partnership.
b. How would your answer to

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Definitions:

Sympathetic

Part of the autonomic nervous system involved in the body's fight or flight response, preparing the body for rapid action in response to a threat.

Sympathetic Nervous System

A part of the autonomic nervous system that activates the 'fight or flight' response, increasing heart rate, dilating pupils, and preparing the body for action.

Parasympathetic

Part of the autonomic nervous system responsible for conserving energy and facilitating rest and digestion processes.

Somatic

Relating to the body, especially as distinct from the mind or psyche.