ST partnership had the following assets: Inventory: Value: 30000 Basis 12000 Lan
ID: 2600841 • Letter: S
Question
ST partnership had the following assets: Inventory: Value: 30000 Basis 12000 Land: Value 90000 basis 48000
Inventory is a section 751 asset and each partner has an outside basis of 30000. S a 50% partner, and T her copartner, received a partial distribution from the partnership. S received land worth 30000 with a basis of 16000. T received inventory worth 30000 and a basis of 12000.
What is T's recognized gain ignoring partnership income?
A) 7000 capital gain B) 7000 ordinary gain C) 9000 ordinary gain D) 14000 ordinary gain
Explanation / Answer
Solution: 9000 ordinary gain
Working:
Value
Basis
Section-751
Inventory
30,000
12,000
T's share = 18,000 * 50% = 9,000 ordinary gain
Value
Basis
Section-751
Inventory
30,000
12,000
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