Cari Hawkins is a 50% partner in the calendar year Hawkins-Henry Partnership. On January 1, 2020, her basis in her partnership interest is $160,000. The partnership has no taxable income or loss for the current year. In a nonliquidating distribution on December 15, the partnership distributes $120,000 cash to Cari and inventory proportionately to all partners. Cari’s share of the inventory has a basis of $50,000 (fair market value of $60,000). In January 2021, Cari asks your advice regarding treatment of 2020 operations and distributions.  a. How much gain or loss does the partnership recognize as a result of 2020activities?

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter9: Acquisitions Of Property
Section: Chapter Questions
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Cari Hawkins is a 50% partner in the calendar year Hawkins-Henry Partnership. On January 1, 2020, her basis in her partnership interest is $160,000. The partnership has no taxable income or loss for the current year. In a nonliquidating distribution on December 15, the partnership distributes $120,000 cash to Cari and inventory proportionately to all partners. Cari’s share of the inventory has a basis of $50,000 (fair market value of $60,000). In January 2021, Cari asks your advice regarding treatment of 2020 operations and distributions. 

a. How much gain or loss does the partnership recognize as a result of 2020activities?

 

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