At the beginning of the tax year, Melodie's basis in the MIP LLC was $64,000, including her $41,600 share of the LLC's liabilities. At the end of the year, MIP distributed to Melodie cash of $9,600 and inventory (basis of $7,680, fair market value of $9,600). In addition, MIP repaid all of its liabilities by the end of the year. a. If this is a proportionate current distribution, what is the tax effect of the distribution to Melodie and MIP? After the distribution, what is Melodie's basis in the inventory and in her MIP interest? If this is a proportionate current distribution, the cash distribution plus relief of liabilities Melodie's basis to After the distribution of inventory, what is Melodie's basis in the inventory and in her MIP interest? Basis in inventory Basis in MIP b. Would your answers to part (a) change if this had been a proportionate liquidating distribution? If this had been a proportionate liquidating distribution, then Melodie would have recognized a of $ , and her basis in the inventory would have been $
At the beginning of the tax year, Melodie's basis in the MIP LLC was $64,000, including her $41,600 share of the LLC's liabilities. At the end of the year, MIP distributed to Melodie cash of $9,600 and inventory (basis of $7,680, fair market value of $9,600). In addition, MIP repaid all of its liabilities by the end of the year. a. If this is a proportionate current distribution, what is the tax effect of the distribution to Melodie and MIP? After the distribution, what is Melodie's basis in the inventory and in her MIP interest? If this is a proportionate current distribution, the cash distribution plus relief of liabilities Melodie's basis to After the distribution of inventory, what is Melodie's basis in the inventory and in her MIP interest? Basis in inventory Basis in MIP b. Would your answers to part (a) change if this had been a proportionate liquidating distribution? If this had been a proportionate liquidating distribution, then Melodie would have recognized a of $ , and her basis in the inventory would have been $
Chapter21: Partnerships
Section: Chapter Questions
Problem 33P
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Transcribed Image Text:At the beginning of the tax year, Melodie's basis in the MIP LLC was $64,000, including her $41,600 share of the LLC's liabilities. At the
end of the year, MIP distributed to Melodie cash of $9,600 and inventory (basis of $7,680, fair market value of $9,600). In addition, MIP
repaid all of its liabilities by the end of the year.
a. If this is a proportionate current distribution, what is the tax effect of the distribution to Melodie and MIP? After the distribution, what
is Melodie's basis in the inventory and in her MIP interest?
If this is a proportionate current distribution, the cash distribution plus relief of liabilities
Melodie's basis to
After the distribution of inventory, what is Melodie's basis in the inventory and in her MIP interest?
Basis in inventory
Basis in MIP
b. Would your answers to part (a) change if this had been a proportionate liquidating distribution?
If this had been a proportionate liquidating distribution, then Melodie would have recognized a
of $
and her basis in the inventory would have been $
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ISBN:
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Author:
Hoffman
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