Reference no: EM132965196

Problem 1: In a proportionate liquidating distribution, Sam receives a distribution of $30,000 cash, accounts receivable basis is zero and FMV is $50,000, land basis is $20,000 and FMV of $50,000. In addition, the partnership repays all liabilities, of which Sam's share was $40,000. Sam's basis in the entity immediately before the distribution was $120,000. As a result of the distribution, what is Sam's basis in the accounts receivable and the land, and how much gain or loss does he recognize?

a. $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss.
b. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss.
c. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain.
d. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss.
e. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss.