2024 – Timothy is a 35 percent partner in the Total Partnership a calendar year end entity Timothy has an outside basis in
Accounting: Partnership Formation And Dissolution – 2024
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 |
FMV |
|
|
Cash |
$50,000 |
$50,000 |
|
Inventory |
65,000 |
75,000 |
|
Land |
50,000 |
65,000 |
|
Totals |
$165,000 |
$180,000 |
- 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.
- 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.
- Discuss the similarities and differences between the tax consequences of the operating distribution and the tax consequences of the liquidation distribution.
| Basis | FMV | |
| $50,000 | $50,000 | |
| 65,000 | 75,000 | |
| 50,000 | 65,000 | |
| $165,000 | $180,000 | |
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