18. LeBron’s interest in the LJ Partnership is liquidated when his basis in the interest is...
18. LeBron’s interest in the LJ Partnership is liquidated when his basis in the interest is $40,000. He receives a liquidating distribution of $25,000 cash and inventory with a basis of $10,000 and an FMV of $15,000. LeBron will recognize
A) no gain or loss.
B) $2,000 capital loss.
C) $2,000 ordinary loss.
D) $5,000 capital loss.
Homework Answers
| Initial basis | $ 40,000 |
| Less: Cash distribution | -25,000 |
| Remaining basis in the partnership | $ 15,000 |
| Less: Property distribution (adjusted basis) | -10,000 |
| Capital loss | $ 5,000 |
Answer: D) $5,000 loss
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18. LeBron’s interest in the LJ Partnership is
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