Francine Receives a Proportionate Liquidating Distribution When the Basis of Her

question 156

Multiple Choice

Francine receives a proportionate liquidating distribution when the basis of her partnership interest is $20,000.The distribution consists of $25,000 cash and noninventory property (adjusted basis to the partnership of $10,000 and fair market value of $12,000) .The partnership has no hot assets.How much gain or loss does Francine recognize,and what is her basis in the distributed property?

• A)$0 gain or loss;$10,000 basis in property.
• B)$0 gain or loss;$12,000 basis in property.
• C)$5,000 ordinary income;$0 basis in property.
• D)$5,000 capital gain;$0 basis in property.
• E)$5,000 capital gain;$10,000 basis in property.

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