Eicho's interest in the DPQ Partnership is terminated when her basis in the partnership is $70,000. She receives a liquidating distribution of $20,000 cash and inventory with a $24,000 basis and a $40,000 FMV. She also receives, as part of the distribution, a desk that has a $100 basis and a $200 FMV to the partnership. What is her gain or loss, and what is her basis in the items received?
What will be an ideal response?
She does not recognize any loss currently. The bases are computed as follows:
Predistribution basis in DPQ $70,000
Minus: money received ( 20,000)
Basis after money distribution 50,000
Minus: basis of inventory to DPQ ( 24,000)
Remaining basis of partnership interest $26,000
The entire $26,000 is allocated to the desk. This delays the loss recognition until the desk is either depreciated or sold.
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