Problem
The RST Partnership makes a pro rata distribution of its assets to R in complete liquidation of R's partnership interest. The distribution consists of $20,000 in cash and capital assets with a basis to the partnership of $15,000 and a fair market value of $30,000. At the time of the distribution, R's partnership basis is $40,000, which is what she paid for the interest one year earlier. If the partnership has no Section 754 election in effect what is R's basis in the property distributed?If no Section 732(d) adjustment is made, R's basis in the capital assets is $15,000.
If no Section 732 (d) adjustment is made, R's basis in the capital assets is $20,000.
If no Section 732 (d) adjustment is made, R's basis in the capital assets is $35,000.
If no Section 732 (d) adjustment is made, R's basis in the capital assets is $40,000.
IRC 732:
ST Partnership had the following assets:Inventory Value $28,000 Basis $12,000
Land Value $70,000 Basis $48,000
Equipment Value $42,000 Basis $32,000Inventory is Section 751 asset and there is $10,000 of Section 1245 recapture of depreciation on the equipment. S, a 50% partner, and T, her copartner, received a partial distribution from the partnership of the land. EACH received land worth $35,000 with a basis of $24,000. What is S's recognized gain, ignoring partnership income?
$0
$5,000 capital gain
$5,000 ordinary gain
$20,000 ordinary gain.
The response must include a reference list. Using Times New Roman 12 pnt font, double-space, one-inch margins, and APA style of writing and citations.