The PW Partnership's Balance Sheet Includes the Following Assets Immediately

question 88

Multiple Choice

The PW partnership's balance sheet includes the following assets immediately before it liquidates:
In complete liquidation PW distributes the cash to Pamela and the unrealized receivables to Wade (equal partners) . Pamela and Wade each have an outside basis in PW equal to $5,000. PW has no liabilities at the time of the liquidation. What is the amount and character of Pamela's recognized gain or loss?

• A)$0
• B)$5,000 capital gain
• C)$5,000 ordinary income
• D)$2,500 capital gain and $2,500 ordinary income

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