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