Martha Receives a Proportionate Nonliquidating Distribution When the Basis of Her

question 97

Multiple Choice

Martha receives a proportionate nonliquidating distribution when the basis of her partnership interest is $50,000.The distribution consists of $60,000 cash and noninventory property (adjusted basis to the partnership of $20,000, fair market value of $23,000) .How much gain or loss does Martha recognize, and what is her basis in the distributed property and in her partnership interest following the distribution?

• A)$0 gain or loss; $20,000 basis in property; $0 basis in partnership interest.
• B)$0 gain or loss; $23,000 basis in property; $2,000 basis in partnership interest.
• C)$10,000 capital gain; $0 basis in property; $0 basis in partnership interest.
• D)$10,000 capital gain; $20,000 basis in property; $0 basis in partnership interest.
• E)$10,000 ordinary income; $0 basis in property; $10,000 basis in partnership interest.

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Definitions:

Three-Month Moving Average

An average calculation that updates by incorporating the most recent three months' data and dropping the oldest month in each new calculation.

Linear Regression

A statistical method for modeling the relationship between a dependent variable and one or more independent variables.

Associative Variables

Factors in statistical analysis that are linked or related in such a way that their values change together in a predictable pattern.

Mathematical Models

Abstractions and representations of real-world systems through mathematical expressions to predict and analyze their behavior.