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Timothy is a 35 percent partner in the Total Partnership

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Question;Timothy is a 35 percent partner in the Total Partnership, a calendar-year-end entity. Timothy has an outside basis in his interest in Total of $198,000, which includes his share of the $45,000 of partnership liabilities. On December 31, Total makes a proportionate distribution of the following assets to Timothy;Basis;Cash $50,000Inventory 65,000Land 50,000Totals $165,000;FMV;Cash $50,000Inventory 75,000Land 65,000Totals $180,000;1- For an operating distribution, outline the tax consequences (amount and character of recognized gain or loss, basis in distributed assets) of the distribution to Timothy.2 -For a liquidating distribution, outline the tax consequences (amount and character of recognized gain or loss, basis in distributed assets) of the distribution to Timothy.3 -Discuss the similarities and differences between the tax consequences of the operating distribution and the tax consequences of the liquidation distribution.

 

Paper#44508 | Written in 18-Jul-2015

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