Proportionate nonliquidating


16-Apr-2020 14:09

Sam’s basis in the entity immediately before the distribution was 0,000.

As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize?

What gain or loss does Nicky recognize, and what is her basis in the accounts receivable? In a proportionate liquidating distribution, Ashleigh receives a distribution of ,000 cash, accounts receivable (basis of

Misha receives a proportionate nonliquidating distribution when the basis of her partnership interest is ,000.

Nicky’s basis in her partnership interest was 0,000, including her ,000 share of partnership liabilities.

, fair market value of ,000), and land (basis of ,000, fair market value of ,000). In addition, the partnership repays all liabilities, of which Ashleigh’s share was ,000. The distribution consists of ,000 cash and inventory (adjusted basis to the partnership of ,000, fair market value of ,000).

basis in accounts receivable; ,000 basis in land; [[

Sam’s basis in the entity immediately before the distribution was $120,000. As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000). Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution. The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest. Nicky receives $30,000 cash and accounts receivable with a $50,000 basis and a $48,000 fair market value to the partnership.

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Sam’s basis in the entity immediately before the distribution was $120,000.

As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000).

Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution.

The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest.

]] gain or loss. [[

Sam’s basis in the entity immediately before the distribution was $120,000. As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000). Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution. The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest. Nicky receives $30,000 cash and accounts receivable with a $50,000 basis and a $48,000 fair market value to the partnership.

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Sam’s basis in the entity immediately before the distribution was $120,000.

As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000).

Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution.

The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest.

]] basis in accounts receivable; ,000 basis in land; [[

Sam’s basis in the entity immediately before the distribution was $120,000. As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000). Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution. The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest. Nicky receives $30,000 cash and accounts receivable with a $50,000 basis and a $48,000 fair market value to the partnership.

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Sam’s basis in the entity immediately before the distribution was $120,000.

As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000).

Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution.

The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest.

]] gain or loss. ,000 basis in accounts receivable; ,000 basis in land; [[

Sam’s basis in the entity immediately before the distribution was $120,000. As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000). Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution. The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest. Nicky receives $30,000 cash and accounts receivable with a $50,000 basis and a $48,000 fair market value to the partnership.

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Sam’s basis in the entity immediately before the distribution was $120,000.

As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000).

Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution.

The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest.

]] gain or loss. ,000 basis in accounts receivable; ,000 basis in land; ,000 gain. [[

Sam’s basis in the entity immediately before the distribution was $120,000. As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000). Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution. The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest. Nicky receives $30,000 cash and accounts receivable with a $50,000 basis and a $48,000 fair market value to the partnership.

||

Sam’s basis in the entity immediately before the distribution was $120,000.

As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000).

Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution.

The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest.

]] basis in accounts receivable; ,000 basis in land; ,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of ,000 cash, inventory (basis of ,000, fair market value of ,000), and land (basis of ,000, fair market value of ,000).

Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 0,000 0,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 0,000 0,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? ,000 basis; ,000 ordinary income; ,000 capital gain. ,000 basis; ,000 ordinary income; ,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received ,000 cash and a capital asset (basis of ,000, fair market value of ,000) in a proportionate liquidating distribution.

The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at ,000 ([[

Sam’s basis in the entity immediately before the distribution was $120,000. As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000). Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution. The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest. Nicky receives $30,000 cash and accounts receivable with a $50,000 basis and a $48,000 fair market value to the partnership.

||

Sam’s basis in the entity immediately before the distribution was $120,000.

As a result of the distribution, what is Sam’s basis in the accounts receivable and land, and how much gain or loss does he recognize? $0 basis in accounts receivable; $50,000 basis in land; $0 gain or loss. $0 basis in accounts receivable; $90,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $40,000 basis in land; $0 gain or loss. $50,000 basis in accounts receivable; $50,000 basis in land; $50,000 gain. $0 basis in accounts receivable; $70,000 basis in land; $30,000 loss. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000), and land (basis of $25,000, fair market value of $30,000).

Which of the following statements, if any, about a multi-member LLC is false? A multi-member LLC is usually taxed like a partnership. “Members” of an LLC generally have limited personal liability for debts of the LLC, except for the managing member who has unlimited liability for LLC debts. “Members” of an LLC can participate in management of the LLC unless the member agrees not to participate. An LLC can specially allocate income items, as long as the substantial economic effect rules of § 704(b) are followed. Adjusted Basis FMV Cash $ 60,000 $ 60,000 Receivables -0- 150,000 Capital assets 90,000 300,000 $150,000 $510,000 Nonrecourse debt $ 90,000 $ 90,000 Barney, capital 20,000 140,000 Lillie, capital 20,000 140,000 Marshall, capital 20,000 140,000 $150,000 $510,000 The nonrecourse debt is shared equally among the LLC members. At the sale date, what is Nicholas’s basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss? $45,000 basis; $6,000 ordinary income; $44,000 capital gain. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions? Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner’s basis in the partnership interest. A partner’s basis in distributed unrealized receivables is the lesser of the partnership’s basis in the receivables or their fair market value. The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis. Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets. The partner can recognize gain, but not loss, on a proportionate liquidating distribution. Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution.

The BLM LLC’s balance sheet on August 31 of the current year is as follows. Nicholas’s share of the LLC’s unrealized receivables is valued at $6,000 ($0 basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest.

]] basis). Which of the following statements is true regarding the sale of a partnership interest? The selling partner’s share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest. For purposes of computing the selling partner’s gain or loss, the partner’s basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold. If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser. The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest. The partner’s share of partnership “hot assets” is disregarded in determining the character of the partner’s gain on the sale of the partnership interest.

proportionate nonliquidating-17

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[[

What gain or loss does Nicky recognize, and what is her basis in the accounts receivable?

In a proportionate liquidating distribution, Ashleigh receives a distribution of $30,000 cash, accounts receivable (basis of $0, fair market value of $40,000), and land (basis of $40,000, fair market value of $50,000).

In addition, the partnership repays all liabilities, of which Ashleigh’s share was $70,000.

The distribution consists of $80,000 cash and inventory (adjusted basis to the partnership of $10,000, fair market value of $20,000).

||

What gain or loss does Nicky recognize, and what is her basis in the accounts receivable? In a proportionate liquidating distribution, Ashleigh receives a distribution of $30,000 cash, accounts receivable (basis of $0, fair market value of $40,000), and land (basis of $40,000, fair market value of $50,000). In addition, the partnership repays all liabilities, of which Ashleigh’s share was $70,000. The distribution consists of $80,000 cash and inventory (adjusted basis to the partnership of $10,000, fair market value of $20,000).

]] [[

Misha receives a proportionate nonliquidating distribution when the basis of her partnership interest is $60,000.

Nicky’s basis in her partnership interest was $150,000, including her $40,000 share of partnership liabilities.

||

Misha receives a proportionate nonliquidating distribution when the basis of her partnership interest is $60,000. Nicky’s basis in her partnership interest was $150,000, including her $40,000 share of partnership liabilities.

]]

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