Advanced Analysis of Partnership Taxation Exam Question 27 of 35 Select the best

Question

Advanced Analysis of Partnership Taxation Exam Question 27 of 35 Select the best answer Cis an equal partner in the ABC Partnership. The partnership has made no election under IRC Section 754.C sells her interest to E for its fair market value of $99,000 when her basis was $88,000. At year-end, the assets of the partnership are as follows: Basis Market Cash Accounts receivable Inventory 22,500 22,500 45,000 94,500 90,000 180,000 $247,500 $342,000 45,000 90,000 Land Assuming that C's outside basis equaled the partnership's inside basis at the time of the sale, what is E's basis in the inventory at year end? O B. $30,000 0 2 74%(

Explanation / Answer

Since No election under IRC Section 754 was there, so the outside basis of C will be 342000/3 = 114000 i.e. 1/3 of the total.

E's basis in inventory will be 1/3 of 94500 = $31500

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