Beth Has an Outside Basis of $60,000 in the BBDE

question 38

Multiple Choice

Beth has an outside basis of $60,000 in the BBDE Partnership as of December 31 of the current year. On that date the partnership liquidates and distributes to Beth a proportionate distribution of $20,000 cash and inventory with an inside basis to the partnership of $18,000 and a fair market value of $22,000. In addition, Beth receives a desk (not inventory) which has an inside basis and fair market value of $200 and $350, respectively. None of the distribution is for partnership goodwill. How much gain or loss will Beth recognize on the distribution, and what basis will she take in the desk?

• A) $21,800 loss; $200 basis.
• B) $21,650 loss; $350 basis.
• C) $0 loss; $200 basis.
• D) $0 loss; $22,000 basis.
• E) None of the above.

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Definitions:

Tangible Real Property

Physical property, such as land or buildings, that has inherent value and exists in the material world.

Corn

A cereal plant that yields large kernels set in rows on a cob, widely grown for food, fodder, and biofuel.

Mortgage

A loan obtained for the purpose of purchasing property, where the property itself serves as collateral for the loan.

Copyright

Intellectual property protection for authors of "original works of authorship," including literary, dramatic, musical, and certain other intellectual works.