Reference no: EM133197533

Using the number on the table below determine the tax treatment to the partner who receives the distribution indicated, and then assuming the partnership has made a Section 754 election, determine the Section 734 adjustment, if any.  If there is none write "None" or "N/A"

In EACH case the basis of the partner's interest is $80,000 before the distribution.

The distribution consists of cash, a capital asset, and inventory as shown.  If a column is blank then that type of asset was not distributed. The column for "Liquidating" indicates whether the distribution liquidated the partner's interest or not.

Situation	Cash Received	Basis of Capital Asset	Basis of Inventory	Liquidating?
A	200,000	50,000	None Distributed	No
B	10,000	20,000	None Distributed	Yes
C	30,000	None Distributed	10,000	No
D	30,000	None Distributed	10,000	Yes
E	-0-	20,000	30,000	No

Update table below

Situation	Partner Gain/<Loss>	Basis to Cash	Basis to Property	Section 734 Adjustment, if any
A	120,000	200,000
B		10,000
C		30,000
D		30,000
E		none