Lauren's basis in Driftwood Partnership is $635,000. Driftwood distributes all the land to Lauren in complete liquidation of her partnership interest. The partnership reports the following balance sheet just before the distribution: Tax Basis FMV Assets Cash Stock (investment) Land $ 695,000 935,000 250,000 $ 1,880,000 $ 395,000 395,000 395,000 $ 1,185,000 Totals Liabilities and capital Capital-Esteban Capital-Kylie Capital-Lauren Totals 635,000 635,000 635,000 $ 1,905,000 b. If Driftwood does not have a $754 election in place, what is the amount of the special basis adjustment, If any? Special basis adjustment

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.