Megan and Matthew are equal partners in the J & J Partnership (a calendar-year-end entity). On January 1 of the current year, they decide to liquidate the partnership. Megan’s basis in her partnership interest is $100,000, and Matthew’s is $35,000. The two partners receive identical distributions, with each receiving the following assets: (Leave no answer blank. Enter zero if applicable.) Tax Basis FMV Cash $ 30,000 $ 30,000 Inventory 5,000 6,000 Land 500 1,000 Totals $ 35,500 $ 37,000 a. What are the amount and character of Megan’s recognized gain or loss? b. What is Megan’s basis in the distributed assets? c. What are the amount and character of Matthew’s recognized gain or loss? d. What is Matthew’s basis in the distributed assets?
Megan and Matthew are equal partners in the J & J
| Tax Basis | FMV | |
|---|---|---|
| Cash | $ 30,000 | $ 30,000 |
| Inventory | 5,000 | 6,000 |
| Land | 500 | 1,000 |
| Totals | $ 35,500 | $ 37,000 |
a. What are the amount and character of Megan’s recognized gain or loss? b. What is Megan’s basis in the distributed assets? c. What are the amount and character of Matthew’s recognized gain or loss? d. What is Matthew’s basis in the distributed assets?
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