Determine Swindler basis in each distributed asset

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Reference no: EM132764589

Problem -

a. The SLD Partnership distributes the following property to Swindler in a distribution that liquidates Swindler's interest in the partnership. Assume that no Sec. 754 election is in effect. Swindler's basis in his partnership interest before the distribution is $69,000. The adjusted bases and FMVs of the distributed property to the partnership before the distribution are as follows:

Assets	Basis	FMV
Cash	$5,000	$5,000
Inventory	16,000	18,000
Capital Asset 1	20,000	30,000
Capital Asset 2	40,000	35,000
Total	81,000	88,000

Determine Swindler's basis in each distributed asset. Show computations for full credit.

b. Paris Corporation, a calendar year taxpayer, has been an S corporation for several years. Derek and Dawn each own 50% of Paris's stock. On September 1 of the current year (assume a non- leap year), Paris issues additional common stock to Berlin Corporation for cash. Derek, Dawn, and Berlin each end up owning one- third of Paris's stock. Paris reports ordinary income of $ 250,000 and a short- term capital loss of $ 30,000 in the current year. Eighty percent of the ordinary income and all the capital loss accrue after Berlin purchases its stock. Paris makes no distributions to its shareholders in the current year. What income and losses do Paris, Berlin, Derek, and Dawn report as a result?

Reference no: EM132764589

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