Timothy is a 35 percent partner in the Total Partnership, a calendar-year-end en
ID: 2382298 • Letter: T
Question
Timothy is a 35 percent partner in the Total Partnership, a calendar-year-end entity. Timothy has an outside basis in his interest in Total of $198,000, which includes his share of the $45,000 of partnership liabilities. On December 31, Total makes a proportionate distribution of the following assets to Timothy:
Basis
FMV
Cash
$50,000
$50,000
Inventory
65,000
75,000
Land
50,000
65,000
Totals
$165,000
$180,000
Basis
FMV
Cash
$50,000
$50,000
Inventory
65,000
75,000
Land
50,000
65,000
Totals
$165,000
$180,000
Explanation / Answer
1. The assets received in an operating distribution are non-taxable generally in the hands of partner and the firm. The distributed assets are written off in the books of the firm and their carrying value is charged against the partner
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