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In a proportionate liquidating distribution in which the partnership is also liquidated, Tom received cash...

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Accounting

In a proportionate liquidating distribution in which the partnership is also liquidated, Tom received cash of $30,000, accounts receivable (basis of $0, fair market value of $20,000), and land (basis of $1,000, fair market value of $10,000; treated as a capital asset by the partnership). Immediately before the distribution, Tom's basis in the partnership interest was $40,000. As a result:

A) Tom realizes and recognizes a loss of $9,000, and his basis is $0 in the accounts receivable and $1,000 in the land.

B) Tom realizes and recognizes a loss of $5,000, and his basis is $2,000 in the accounts receivable and $1,000 in the land.

C) Tom realizes and recognizes a loss of $0, and his basis is $0 in the accounts receivable and $1,000 in the land.

D) Tom realizes and recognizes a loss of $0, and his basis is $0 in the accounts receivable and $5,000 in the land.

E) None of the above

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