Daniel's Basis in the DAT Partnership Is $135,000 If DAT Has a §754 Election in Place, What Is

question 66

Essay

Daniel's basis in the DAT Partnership is $135,000. DAT distributes its land to Daniel in complete liquidation of his partnership interest. DAT reports the following balance sheet just before the distribution: $$\begin{array} { | l | r | r | } \hline & \text { Basis } & \text { FMV } \\\hline \text { Cash } & \$ 80,000 & \$ 80,000 \\\hline \text { Inventory } & 60,000 & 180,000 \\\hline \text { Land held for investment } & \underline { 160,000 } & \underline { 100,000 } \\\hline \text { Total } & \$ 300,000 & \$ 360,000 \\\hline\end{array}$$ $$\begin{array} { | l | r | } \hline \text { Pre-distribution basis in JM } & \$ 54,000 \\\hline \text { Plus: deemed contribution } & 15,000 \\\hline \text { Less: basis allocated to land } & ( 64,0000) \\\hline \text { Remaining basis in JM } & \$ 5,000 \\\hline\end{array}$$ If DAT has a §754 election in place, what is the amount of the special basis adjustment resulting from the distribution to Daniel? What is DAT's basis in its remaining assets?

Recognize the importance of accounting policy decisions in financial reporting.

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Definitions:

Genes

Genes are the basic physical and functional units of heredity, made up of DNA, that determine the characteristics of an organism.

Environment

encompasses all external factors and conditions that affect living organisms, including natural forces and other living things, which provides the context for the development and growth of organisms.

Simultaneously

Occurring, operating, or done at the same time.

Darwin

Charles Darwin, a 19th-century naturalist known for his contributions to the science of evolution and his theory of natural selection.