Reference no: EM132648445

Problem - When Teri's outside basis in the TMF Partnership is $80,000, the partnership distributes to her $30,000 cash, an account receivable (fair market value of $60,000, inside basis to the partnership of $0), and a parcel of land (fair market value of $60,000, inside basis to the partnership of $80,000). Teri remains a partner in the partnership, and the distribution is proportionate to the partners.

Required -

a. Use the format of Concept Summary 11.1 to create a spreadsheet to calculate the effects of the distribution. Set up an Input area for the amounts on lines 1, 2, 5, and 8. Code the formulas shown in the Calculations section of the concept summary to calculate the amounts in the remaining lines. You will use "sum," "min," and "max" formulas. Enter Teri's relevant facts in the input section of your spreadsheet.

b. Based on the information in your spreadsheet, how much gain or loss will Teri recognize as a result of the distribution? Explain your answer.

c. How much is Teri's basis in the land, account receivable, and TMF Partnership after the distribution? What can you conclude regarding Teri's basis in the assets and the fair market value she received?

d. How would your answer to part (c) change if, instead, the partnership's basis in the land was $10,000 and its fair market value was $30,000 (and the cash and unrealized receivable distributions do not change)? Adjust the input section of your spreadsheet, and explain your findings.