Reference no: EM131756680

Question 1. Amber has a tax basis of $67,000 in her partnership interest in Lightfoot Partnership, which consists of her $27,000 net contribution to partnership capital and her $40,000 share of partnership debt. Amber receives a distribution of land (a capital asset) with a tax basis of $39,000 and a fair market value of $106,000 in complete liquidation of her partnership interest. The property is not encumbered by any of the partnership's liabilities. What is Amber's tax basis for the distributed property?

$27,000
$39,000
$67,000
$106,000

Question 2. Juan's interest in the Gonzalez Partnership is liquidated when his basis in the interest is $30,000. He receives a liquidating distribution of $20,000 cash and inventory with a basis of $8,000 and a fair market value of $30,000. Juan will recognize:

No gain or loss
$2,000 loss
$10,000 loss
$20,000 gain