Jaime Has a Basis in Her Partnership Interest of $50,000

question 60

True/False

Jaime has a basis in her partnership interest of $50,000 when the partnership distributes (in an operating distribution) two parcels of land to Jaime, each valued at $30,000. The basis in parcel A is $40,000 and the basis in parcel B is $20,000. Jaime allocates $20,000 of basis to parcel A and $30,000 of basis to parcel
B.
Basis is allocated based on the relative fair market values of the property according to §732(c).

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Definitions:

Pledged Assets

Pledged assets are those items of value that are pledged as collateral for a loan or obligation, securing the repayment of the loan by providing the lender rights to the collateral in case of default.

Net Realizable Value

The estimated selling price in the ordinary course of business minus estimated costs of completion and applicable selling expenses.

Unsecured Non-priority Creditor

This type of creditor has a claim against the debtor that is not backed by collateral and does not have priority in bankruptcy proceedings.

Chapter 7 Liquidation

A process under the U.S. bankruptcy laws where a bankrupt company's assets are sold off to pay creditors.