Two years ago, Tom contributed investment land with a basis of $50,000 and an FMV of $62,000 to the RST Partnership. This year, Tom has a basis in his partnership interest of $53,000 when he receives a current distribution of $14,000 cash and inventory with a basis of $35,000 and an FMV of $52,000. (There is no Sec. 751 exchange in connection with the inventory distribution.) The partnership
continues to hold the land Tom contributed. How much gain (if any) must Tom recognize as a result of this distribution?
What will be an ideal response?
Precontribution gain = $62,000 - $50,000 = $12,000
Predistribution basis $53,000
Minus: cash distribution ( 14,000)
$39,000
Minus: FMV of distribution other than cash ( 52,000)
Tentative Sec. 737 gain $13,000
Recognized gain = $12,000 [the smaller of precontribution gain ($12,000) or tentative Sec. 737 gain ($13,000)].
You might also like to view...
Overstating ending inventory has the following effect on cost of goods sold and net income respectively
a. COGS - overstated and NI - overstated b. COGS - understated and NI - overstated c. COGS - overstated and NI - understated d. COGS - No effect and NI - understated
The division of buyers into groups based on what they prefer and what motivates them to respond to marketing activities is ________ segmentation
A) behavioral B) psychographic C) values D) demographic E) needs
A quota sample is an example of nonprobability sampling
Indicate whether the statement is true or false
Which pair of accounts has the same set of rules for debit and credit entries?
A. common stock and accounts payable B. salary expense and retained earnings C. cash and notes payable D. sales revenue and accounts receivable