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