Randi owns a 40% interest in the capital and profits of the RAY Partnership. Immediately before she receives a proportionate current (nonliquidating) distribution from RAY, the basis for her partnership interest is $60,000. The distribution consists of $45,000 in cash and land with a fair market value of $72,000. RAY's adjusted basis in the land immediately before the distribution is $36,000. As a result of the distribution, Randi recognizes a gain of $57,000.
Answer the following statement true (T) or false (F)
False
Rationale: Under ยงย 731(a), gain is recognized by a distributee partner in a current (nonliquidating) distribution only if the cash received (including marketable securities or liability relief treated as cash) exceeds the basis of the partner's interest. Because Randi received cash of $45,000 (compared to her basis of $60,000), no gain results. Randi's basis in the land is limited to $15,000, and her interest basis is reduced to zero.
You might also like to view...
The three forms or states in the development of inventory for a manufacturer are direct materials, direct labor, and finished goods
a. True b. False Indicate whether the statement is true or false
Products should be designed to ensure ______ time between failures.
A. short B. equal C. long D. unequal
In Lawler v. Montblanc North America, where Lawler was fired soon after telling her supervisor that for medical reasons she could not work more than 20 hours per week, the appeals court held she could sue the employer for mental distress because her expert witness testified that she was emotionally fragile and was "nearly destroyed" by the action
a. True b. False Indicate whether the statement is true or false
Which of the following sampling methods is a probabilistic sampling method?
a. judgment sampling b. convenience sampling c. cluster sampling d. None of the answers is correct.