ST partnership had the following assets: Inventory Value $30,000 with a Basis of
ID: 340909 • Letter: S
Question
ST partnership had the following assets: Inventory Value $30,000 with a Basis of $12,000, and Land Value $90,000 with a Basis of $48,000. A Total Value $120,00 and a Basis of $60,000. Inventory is a Section 751 asset and each partner has an outside basis of $30,000. S, a 50% partner, and T, her co-partner, received a partial distribution from the partnership. S received land worth $30,000 with a basis of $16,000; T received inventory worth $30,000 with a basis of $12,000. What is S's recognized disproportionate gain, ignoring partnership income? A.) $7,000 capital gain B.) $9,000 capital gain C.) $9,000 ordinary gain D.) $14,000 ordinary gain
Explanation / Answer
Answer A.) $7,000 capital gain
Explanation:
As per Section-75
Income for land = Value - basis
=$30000-$16000 = $14000
S's shares = $14000*50%
= $7000
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