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Cliff’s basis in his Aero Partnership interest is $18,500. Cliff receives a distribution of $24,100 cash...

Cliff’s basis in his Aero Partnership interest is $18,500. Cliff receives a distribution of $24,100 cash from Aero in complete liquidation of his interest. Aero is an equal partnership with the following balance sheet:

Tax Basis FMV
Assets:
Cash $ 24,100 $ 24,100
Investment 28,800 28,800
Land 2,600 36,700
Totals $ 55,500 $ 89,600
Liabilities and capital:
Capital – Chris 18,500
– Cliff 18,500
– Cooper 18,500
Totals $ 55,500

b. If Aero has a §754 election in place, what is the amount of the special basis adjustment?

Special Basis Adjustment:

Increase decrease or none?

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Answer #1

17 Recognized Gain (24100 - 18500) 5600 Capital Gain 18 19 b. If Aero has a $754 election in place, what is the amount of the

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