Outline the income tax consequences to Marvin

Reference no: EM132216916

Question - Marvin Bridges is a 25 percent partner in the Munson partnership. On November 23, 2017, Marvin contributes property with an adjusted basis of $75,000 and a fair market value of $250,000 to the Munson partnership. On March 15, 2018, Marvin receives a $187,500 cash distribution from the partnership.

1. Why would the IRS seek to classify the transactions as a disguised sale?

2. Assume that the IRS is successful in classifying the transactions as a disguised sale. Outline the income tax consequences to Marvin.

Reference no: EM132216916

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