What is ajs basis in the distributed assets

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Reference no: EM133416678

Question: AJ is a 30 percent partner in the Trane Partnership, a calendar-year-end entity. On January 1, AJ has an outside basis in his interest in Trane of $76,500, which includes his share of the $52,800 of partnership liabilities. Trane generates $43,400 of income during the year and does not make any changes to its liabilities. On December 31, Trane makes a proportionate distribution of the following assets to AJ to terminate his partnership interest:

               Tax Basis   FMV
Inventory $ 58,500    $ 69,200
Land         31,400      25,700
Totals       $ 89,900     $ 94,900

a. What are the tax consequences (gain or loss, basis adjustments) of the distribution to Trane?

b. What are the amount and character of any recognized gain or loss to AJ?

c. What is AJs basis in the distributed assets?

d. If AJ sells the inventory four years after the distribution for $74,200, what are the amount and character of his recognized gain or loss?

Reference no: EM133416678

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