Capital gain on sale of the property

Question

Question 1: Delilah receives a proportionate, nonliquidating distribution from the Carbon Partnership. The distribution consists of $50,000 cash and property with an adjusted basis to the partnership of $150,000 and a fair market value of $180,000. Immediately before the distribution, Delilah's adjusted basis for her partnership interest is $170,000. Delilah's basis in the noncash property received is:

• $180,000
• $150,000
• $120,000
• $50,000
• None of the above.

Question 2: Rosalie is a real estate developer and owns property that is treated as inventory (not a capital asset) in her business. She contributed a parcel of this land (basis $40,000; fair market value $48,000) to a partnership, which will also hold it as inventory. After three years, the partnership sells the land for $60,000. The partnership will recognize a $20,000 capital gain on sale of the property.

• True
• False

Question 3: Juliet contributed property with a $48,000 basis and fair market value of $100,000 to the JT Partnership in exchange for a 40% interest in partnership capital and profits. During the first year of partnership operations, JT had net taxable income of $40,000 and tax-exempt income of $80,000. The partnership distributed $40,000 cash to Juliet. Her share of partnership recourse liabilities on the last day of the partnership year was $30,000. Juliet's adjusted basis (outside basis) for her partnership interest at year-end is:

• $64,000
• $126,000
• $70,000
• $86,000
• None of the above

Question 4: Micah and Ariana formed an equal partnership on June 1 of the current year. Micah contributed $10,000 cash and land with a basis of $6,000 and a fair market value of $15,000. Ariana contributed equipment with a basis of $30,000 and a value of $25,000. Micah's tax basis in his interest is $16,000; Ariana's tax basis is also $25,000.

• True
• False

Question 5: The Copper Partnership distributed $30,000 cash to Esme in a proportionate, nonliquidating distribution. Esme's basis in her partnership interest was $20,000 immediately before the distribution. As a result of the distribution, Esme's basis is reduced to $0, and she recognizes $10,000 of capital gain.

• True
• False

Question 6: Izzy's partnership interest basis is $60,000. Izzy receives a proportionate, liquidating distribution from a liquidating partnership of $45,000 cash and inventory having a basis of $20,000 to the partnership and a fair market value of $6,000. Izzy assigns a basis of $6,000 to the inventory and recognizes a $9,000 loss.

• True
• False

Question 7: Piper and Adam formed a partnership. Piper received a 50% interest in partnership capital and profits in exchange for contributing land with a basis of $160,000 and a fair market value of $300,000. Adam received a 50% interest in partnership capital and profits in exchange for contributing $300,000 of cash. Three years after the contribution date, the land contributed by Piper is sold by the partnership to a third party for $360,000. How much taxable gain will Piper recognize from the sale?

• $170,000
• $140,000
• $200,000
• $30,000
• None of the above

Question 8: Molly owns a 30% interest in the capital and profits of the Silver Partnership. Immediately before she receives a proportionate nonliquidating distribution from Silver, the basis of her partnership interest is $60,000. The distribution consists of $20,000 in cash and land with a fair market value of $80,000. Silver's adjusted basis in the land immediately before the distribution is $70,000. As a result of the distribution, Molly recognizes a gain of $30,000 and her basis in the land is $70,000.

• True
• False

Question 9: Sydney is a partner in the Lime Partnership, which is not publicly traded. Her allocable share of Lime's passive ordinary losses from a nonrealty activity for the current year is ($300,000). Sydney has a $125,000 adjusted basis (outside basis) for her interest in Lime (before deduction of any of the passive losses). Her amount "at risk" under §Â 465 is $100,000 (before deduction of any of the passive losses). She also has $60,000 of passive income from other sources. How much of the $300,000 passive loss allocated to her can Sydney deduct on her current year's tax return?

• $60,000
• $100,000
• $300,000
• $125,000
• None of the above

Question 10: Joseph has an outside basis of $80,000 in the Tungsten Partnership as of December 31 of the current year. On that date the partnership liquidates and distributes to Joseph a proportionate distribution of $35,000 cash and inventory with an inside basis to the partnership of $25,000 and a fair market value of $50,000. In addition, Joseph receives a safe which has an inside basis and fair market value of $4,500 and $6,000, respectively. None of the distribution is for partnership goodwill. How much gain or loss will Joseph recognize on the distribution, and what basis will he take in the safe?

• $0 loss; $20,000 basis
• $14,000 loss; $6,000 basis
• $5,000 loss; $-0- basis
• $15,500 loss; $4,500 basis
• None of the above