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

question 128

Multiple Choice

In a proportionate liquidating distribution, Scott receives a distribution of $20,000 cash, accounts receivable (basis of $0, fair market value of $40,000) , and land (basis of $30,000, 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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