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How would you characterize the total of gain

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Reference no: EM132762108

Question - ABCD is a cash basis partnership & has 4 equal (25%) partners. ABCD has the following assets with no liabilities:

Cash $200,000

Uncollected Receivables- Basis to ABCD of $0 & FMV $100,000

Land- Basis to ABCD $50,000 & FMV $95,000

Inventory- Batch#1- Basis to ABCD of $55,000, FMV $60,000

Inventory- Batch #2- Basis to ABCD of $100,000, FMV $140,000

Total Basis $400,000, Total FMV $600,000

Partner A receives a liquidating distribution of $150,000 in cash when A's basis in his partnership interest was $100,000 just prior to the liquidating distribution.

Required - How would you characterize the total of $50,000 gain from this liquidating distribution?

A. All capital gain

B. $35,000 ordinary gain & $15,000 capital gain

C. All ordinary gain

D. $36,250 ordinary gain & $13,750 capital gain

E. None of the above

Reference no: EM132762108

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