Catherine's Basis Was $50,000 in the CAR Partnership Interest Just

question 4

Multiple Choice

Catherine's basis was $50,000 in the CAR Partnership interest just before she received a proportionate nonliquidating distribution consisting of land held for investment (basis of $40,000,fair market value of $60,000) and inventory (basis of $40,000,fair market value of $40,000) .After the distribution,Catherine's bases in the land and inventory are,respectively:

• A)$40,000 and $40,000.
• B)$40,000 and $10,000.
• C)$10,000 and $40,000.
• D)$25,000 and $25,000.
• E)None of the above.

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Definitions:

Accounts Receivable

Accounts receivable represent the money owed to a company by its customers for goods or services delivered but not yet paid for.

Merchandise

Goods that are purchased for resale at a profit; the main product that a retailer sells.

Sales on Account

Transactions where goods are sold and payment is deferred to a future date; this is typically tracked through accounts receivable.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, before any purchases or sales have occurred.