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:

Mortality

The state of being subject to death or the incidence of death within a population.

Natality

The birth rate, or the number of births within a population over a certain period of time, often expressed per 1000 individuals.

Population Crash

A sudden, sharp decrease in the size of a population due to environmental factors.

Carrying Capacity

The maximum population size of a biological species that an environment can sustain indefinitely, given the food, habitat, water, and other necessities available.