Chat with us, powered by LiveChat Question 52. [LO 4] Bryce's basis in the Markit Partnership is $58,000. In a proportionate liquidating distribution, Bryce receives the following assets: Tax Basis FMV Cash $8,000 $8,000 Land A 20,000 45,000 Land B 20,000 25,000 a. How much gain or loss will Bryce recognize on the distribution? What is the character of any recognized gain or loss? b. What is Bryce's basis in the distributed assets? 53. [LO 4] {Planning} Danner Inc. has a $395,000 capital loss carryover that will expire at the end of the current tax year if it is not used. Also, Danner Inc. has been a general partner in the Talisman Partnership for three years and plans to end its involvement with the partnership by receiving a liquidating distribution. Initially, all parties agreed that Danner Inc.'s liquidating distribution would include $50,000 in cash and land with a fair market value of $400,000 (tax basis of $120,000). Immediately before the distribution, Danner's basis in its partnership interest is $150,000 which includes its $100,000 share of partnership debt. The Talisman Partnership does not hold any hot assets. a. What is the amount and character of any gain or loss to Danner Inc.? b. What is Danner Inc.'s basis in the land? c. Can you suggest a course of action that would help Danner Inc. to avoid the expiration of its capital loss carryover? 54. [LO 1, 5] {Planning} Bella Partnership is an equal partnership in which each of the partners has a basis in his partnership interest of $10,000. Bella reports the following balance sheet: Assets: Tax Basis FMV Inventory $ 20,000 $ 30,000 Land 10,000 15,000 Totals $ 30,000 $ 45,000 Liabilities and capital: Capital – Toby 10,000 – Kaelin 10,000 – Andrew 10,000 Totals $ 30,000 a. Identify the "hot assets" if Toby decides to sell his partnership interest. Are these assets "hot" for purposes of distributions? b. If Bella distributes the land to Toby in complete liquidation of his partnership interest, what tax issues should be considered? 55. [LO 1, 6] Michelle pays $120,000 cash for Brittany's one-third interest in the Westlake Partnership. Just prior to the sale, Brittany's basis in Westlake is $96,000. Westlake reports the following balance sheet: Assets: Tax Basis FMV Cash $ 96,000 $ 96,000 Land 192,000 264,000 | Writedemy

Question 52. [LO 4] Bryce’s basis in the Markit Partnership is $58,000. In a proportionate liquidating distribution, Bryce receives the following assets: Tax Basis FMV Cash $8,000 $8,000 Land A 20,000 45,000 Land B 20,000 25,000 a. How much gain or loss will Bryce recognize on the distribution? What is the character of any recognized gain or loss? b. What is Bryce’s basis in the distributed assets? 53. [LO 4] {Planning} Danner Inc. has a $395,000 capital loss carryover that will expire at the end of the current tax year if it is not used. Also, Danner Inc. has been a general partner in the Talisman Partnership for three years and plans to end its involvement with the partnership by receiving a liquidating distribution. Initially, all parties agreed that Danner Inc.’s liquidating distribution would include $50,000 in cash and land with a fair market value of $400,000 (tax basis of $120,000). Immediately before the distribution, Danner’s basis in its partnership interest is $150,000 which includes its $100,000 share of partnership debt. The Talisman Partnership does not hold any hot assets. a. What is the amount and character of any gain or loss to Danner Inc.? b. What is Danner Inc.’s basis in the land? c. Can you suggest a course of action that would help Danner Inc. to avoid the expiration of its capital loss carryover? 54. [LO 1, 5] {Planning} Bella Partnership is an equal partnership in which each of the partners has a basis in his partnership interest of $10,000. Bella reports the following balance sheet: Assets: Tax Basis FMV Inventory $ 20,000 $ 30,000 Land 10,000 15,000 Totals $ 30,000 $ 45,000 Liabilities and capital: Capital – Toby 10,000 – Kaelin 10,000 – Andrew 10,000 Totals $ 30,000 a. Identify the “hot assets” if Toby decides to sell his partnership interest. Are these assets “hot” for purposes of distributions? b. If Bella distributes the land to Toby in complete liquidation of his partnership interest, what tax issues should be considered? 55. [LO 1, 6] Michelle pays $120,000 cash for Brittany’s one-third interest in the Westlake Partnership. Just prior to the sale, Brittany’s basis in Westlake is $96,000. Westlake reports the following balance sheet: Assets: Tax Basis FMV Cash $ 96,000 $ 96,000 Land 192,000 264,000

25 May Question 52. [LO 4] Bryce’s basis in the Markit Partnership is $58,000. In a proportionate liquidating distribution, Bryce receives the following assets: Tax Basis FMV Cash $8,000 $8,000 Land A 20,000 45,000 Land B 20,000 25,000 a. How much gain or loss will Bryce recognize on the distribution? What is the character of any recognized gain or loss? b. What is Bryce’s basis in the distributed assets? 53. [LO 4] {Planning} Danner Inc. has a $395,000 capital loss carryover that will expire at the end of the current tax year if it is not used. Also, Danner Inc. has been a general partner in the Talisman Partnership for three years and plans to end its involvement with the partnership by receiving a liquidating distribution. Initially, all parties agreed that Danner Inc.’s liquidating distribution would include $50,000 in cash and land with a fair market value of $400,000 (tax basis of $120,000). Immediately before the distribution, Danner’s basis in its partnership interest is $150,000 which includes its $100,000 share of partnership debt. The Talisman Partnership does not hold any hot assets. a. What is the amount and character of any gain or loss to Danner Inc.? b. What is Danner Inc.’s basis in the land? c. Can you suggest a course of action that would help Danner Inc. to avoid the expiration of its capital loss carryover? 54. [LO 1, 5] {Planning} Bella Partnership is an equal partnership in which each of the partners has a basis in his partnership interest of $10,000. Bella reports the following balance sheet: Assets: Tax Basis FMV Inventory $ 20,000 $ 30,000 Land 10,000 15,000 Totals $ 30,000 $ 45,000 Liabilities and capital: Capital – Toby 10,000 – Kaelin 10,000 – Andrew 10,000 Totals $ 30,000 a. Identify the “hot assets” if Toby decides to sell his partnership interest. Are these assets “hot” for purposes of distributions? b. If Bella distributes the land to Toby in complete liquidation of his partnership interest, what tax issues should be considered? 55. [LO 1, 6] Michelle pays $120,000 cash for Brittany’s one-third interest in the Westlake Partnership. Just prior to the sale, Brittany’s basis in Westlake is $96,000. Westlake reports the following balance sheet: Assets: Tax Basis FMV Cash $ 96,000 $ 96,000 Land 192,000 264,000

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Question

52. [LO 4] Bryce’s basis in the Markit Partnership is $58,000. In a proportionate liquidating distribution, Bryce receives the following assets:

Tax Basis FMV

Cash $8,000 $8,000

Land A 20,000 45,000

Land B 20,000 25,000

a. How much gain or loss will Bryce recognize on the distribution? What is the character of any recognized gain or loss?

b. What is Bryce’s basis in the distributed assets?

53. [LO 4] {Planning} Danner Inc. has a $395,000 capital loss carryover that will expire at the end of the current tax year if it is not used. Also, Danner Inc. has been a general partner in the Talisman Partnership for three years and plans to end its involvement with the partnership by receiving a liquidating distribution. Initially, all parties agreed that Danner Inc.’s liquidating distribution would include $50,000 in cash and land with a fair market value of $400,000 (tax basis of $120,000). Immediately before the distribution, Danner’s basis in its partnership interest is $150,000 which includes its $100,000 share of partnership debt. The Talisman Partnership does not hold any hot assets.

a. What is the amount and character of any gain or loss to Danner Inc.?

b. What is Danner Inc.’s basis in the land?

c. Can you suggest a course of action that would help Danner Inc. to avoid the expiration of its capital loss carryover?

54. [LO 1, 5] {Planning} Bella Partnership is an equal partnership in which each of the partners has a basis in his partnership interest of $10,000. Bella reports the following balance sheet:

Assets: Tax Basis FMV

Inventory $ 20,000 $ 30,000

Land 10,000 15,000

Totals $ 30,000 $ 45,000

Liabilities and capital:

Capital – Toby 10,000

– Kaelin 10,000

– Andrew 10,000

Totals $ 30,000

a. Identify the “hot assets” if Toby decides to sell his partnership interest. Are these assets “hot” for purposes of distributions?

b. If Bella distributes the land to Toby in complete liquidation of his partnership interest, what tax issues should be considered?

55. [LO 1, 6] Michelle pays $120,000 cash for Brittany’s one-third interest in the Westlake Partnership. Just prior to the sale, Brittany’s basis in Westlake is $96,000. Westlake reports the following balance sheet:

Assets: Tax Basis FMV

Cash $ 96,000 $ 96,000

Land 192,000 264,000

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