At the Beginning of the Year, Elsie's Basis in the E&G

question 85

Multiple Choice

At the beginning of the year, Elsie's basis in the E&G Partnership interest is $60,000. She receives a proportionate nonliquidating distribution from the partnership consisting of $10,000 of cash, unrealized accounts receivable (basis of $0, fair market value $30,000) , and inventory (basis of $10,000, fair market value of $20,000) . After the distribution, Elsie's bases in the accounts receivable, inventory, and partnership interest are:

• A) $0; $10,000; and $40,000.
• B) $0; $20,000; and $30,000.
• C) $30,000; $10,000; and $10,000.
• D) $30,000; $20,000; and $0.
• E) None of the above.

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Definitions:

Real Property

Land and anything permanently attached to it, such as buildings.

Deed Of Trust

A formal written instrument that transfers legal ownership of real property to a third party while the mortgagor remains on the property. The third party holds certain rights to that property as security for the mortgagor’s creditors.

Disinterested Third Party

A disinterested third party is an unbiased individual or entity that is not involved in the matters at hand, ensuring impartiality in decision-making processes or disputes.

One Percent

Often refers to the segment of the population that holds a disproportionately large share of wealth and economic power.