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The PQRS Partnership owns the following assets on December 30 of the current? year: ...

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Question

Accounting

The PQRS Partnership owns the following assets on December 30 of the current? year:

Assets

Partnership's Basis

FMV

Cash

$20,000

$20,000

Receivables

0

40,000

Inventory

80,000

100,000

Total

$100,000

$160,000

The partnership has no? liabilities, and each? partner's basis in his or her partnership interest is $25,000.On December 30 of the current? year,Paula receives a current distribution of inventory having a $10,000 FMV, which reduces her partnership interest from? one-fourth to? one-fifth.

Requirement

What are the tax consequences of the distribution to the? partnership,Paula?,and the other? partners?

Paula's

Paula's

Beginning

Interest Before

Interest After

Hypothetical

Partnership

Distribution

Distribution

Proportionate

Actual

Amount

(1/4)

(1/5)

Distribution

Distribution

Difference

Sec. 751 assets:

Total Sec. 751 assets

Non-Sec. 751 assets:

Total non-Sec. 751 assets

Answer & Explanation Solved by verified expert
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