Matt Receives a Proportionate Nonliquidating Distribution

question 10

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, 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:

Formal Authority

The power or right vested in an individual or role within an organization to make decisions, direct others, and enforce rules.

Organizational Politics

Activities and behaviors within an organization aimed at improving personal status or influence, often at the expense of others or the company.

Emerging Field

An area of study or interest that is gaining popularity and is in the process of establishing itself as a distinct area of expertise.

Labor Market

The supply of available workers in relation to available work; the place where workers and jobs interact.