Lonnie Davis has been a general partner in the Highland Partnership for many years and is...

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Lonnie Davis has been a general partner in the HighlandPartnership for many years and is also a sole proprietor in aseparate business. To spend more time focusing on his soleproprietorship, he plans to leave Highland and will receive aliquidating distribution of $50,500 in cash and land with a fairmarket value of $115,500 (tax basis of $145,250). Immediatelybefore the distribution, Lonnie’s basis in his partnership interestis $412,000, which includes his $57,000 share of partnership debt.The Highland Partnership does not hold any hot assets.
a. What is the amount and character of any gainor loss to Lonnie?
b. What is Lonnie’s basis in the land?
c. What is the amount and character of Lonnie’sgain or loss if he holds the land for 13 months as investmentproperty and then sells it for $161,000?
d. Assume there are no gains from the sale ofother Section 1231 in the same tax year. What is the amount andcharacter of Lonnie’s gain or loss if he places the land intoservice in his sole proprietorship and then sells it 13 monthslater for $161,000?

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a What is the amount and character of any gain or loss to Lonnie No gain no loss No gain because cash received debt relief 50500 57000 107500 Lonnies basis in his partnership interest 41200 No loss because the assets have been See Answer

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Lonnie Davis has been a general partner in the HighlandPartnership for many years and is also a sole proprietor in aseparate business. To spend more time focusing on his soleproprietorship, he plans to leave Highland and will receive aliquidating distribution of $50,500 in cash and land with a fairmarket value of $115,500 (tax basis of $145,250). Immediatelybefore the distribution, Lonnie’s basis in his partnership interestis $412,000, which includes his $57,000 share of partnership debt.The Highland Partnership does not hold any hot assets.a. What is the amount and character of any gainor loss to Lonnie?b. What is Lonnie’s basis in the land?c. What is the amount and character of Lonnie’sgain or loss if he holds the land for 13 months as investmentproperty and then sells it for $161,000?d. Assume there are no gains from the sale ofother Section 1231 in the same tax year. What is the amount andcharacter of Lonnie’s gain or loss if he places the land intoservice in his sole proprietorship and then sells it 13 monthslater for $161,000?