Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plans to leave Highland and will receive a liquidating distribution of $50, 500 in cash and land with a fair market value of $115,500 (tax basis of $145, 250). Immediately before the distribution, Lonnie's basis in his partnership interest is $412,000, which includes his $57,000 share of partnership debt. Highland Partnership does not hold any hot assets. a. What are the amount and character of any gain or loss to Lonnie?
Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plans to leave Highland and will receive a liquidating distribution of $50, 500 in cash and land with a fair market value of $115,500 (tax basis of $145, 250). Immediately before the distribution, Lonnie's basis in his partnership interest is $412,000, which includes his $57,000 share of partnership debt. Highland Partnership does not hold any hot assets. a. What are the amount and character of any gain or loss to Lonnie?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plans to
leave Highland and will receive a liquidating distribution of $50, 500 in cash and land with a fair market value of $115,500 (tax basis of $145, 250). Immediately before the distribution, Lonnie's basis in his
partnership interest is $412, 000, which includes his $57,000 share of partnership debt. Highland Partnership does not hold any hot assets. a. What are the amount and character of any gain or loss to
Lonnie?
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