Megan and Matthew are equal partners in the J & J Partnership (calendar year-end entity). On January 1 of the curre year, they decide to liquidate the partnership. Megan's basis in her partnership interest is $119,000 and Matthew's i $42,600. The two partners receive identical distributions, with each receiving the following assets: (Leave no answ blank. Enter zero if applicable.) Cash Inventory Land Totals Tax Basis $34,750 7,850 975 $43,575 FMV $34,750 9,040 1,570 $45,360 a. What is the amount and character of Megan's recognized gain or loss? ONeither gain nor loss recognized O $73,925 of ordinary loss O $2,095 of ordinary income O $73,925 of capital loss O $2,095 of capital gain
Megan and Matthew are equal partners in the J & J Partnership (calendar year-end entity). On January 1 of the curre year, they decide to liquidate the partnership. Megan's basis in her partnership interest is $119,000 and Matthew's i $42,600. The two partners receive identical distributions, with each receiving the following assets: (Leave no answ blank. Enter zero if applicable.) Cash Inventory Land Totals Tax Basis $34,750 7,850 975 $43,575 FMV $34,750 9,040 1,570 $45,360 a. What is the amount and character of Megan's recognized gain or loss? ONeither gain nor loss recognized O $73,925 of ordinary loss O $2,095 of ordinary income O $73,925 of capital loss O $2,095 of capital gain
Chapter21: Partnerships
Section: Chapter Questions
Problem 22CE
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Transcribed Image Text:Megan and Matthew are equal partners in the J & J Partnership (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 $119,000 and Matthew's is
$42,600. The two partners receive identical distributions, with each receiving the following assets: (Leave no answer
blank. Enter zero if applicable.)
Cash
Inventory
Land
Totals
Tax
Basis
FMV
$34,750 $34,750
7,850
9,040
975
1,570
$45,360
$43,575
a. What is the amount and character of Megan's recognized gain or loss?
Neither gain nor loss recognized
$73,925 of ordinary loss
$2,095 of ordinary income
$73,925 of capital loss
$2,095 of capital gain
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