Tom, Tina, Tatum, and Terry are equal owners (treated as generalpartners) in the 4-Ts LLC, a cash basis service entity. 4-Ts has unrealizedreceivables of $400,000 (basis of $0) and no other hot assets. A goodwillpayment of $50,000 per partner is provided for in the LLC's operatingagreement. If 4-Ts distributes cash of $300,000 to Tom in liquidation ofhis LLC interest, which of the following statements is correct?Oa. The $50,000 payment that relates to LLC goodwill cannot be deducted by theLLC.b. The $200,000 § 736(b) payment will be taxed to Tom as ordinary income.Oc. The partnership treats the $100,000 payment for Tom's share of unrealizedreceivables as part of Tom's § 736(b) payment.Od. The $150,000 § 736(a) payment will result in a capital gain to Tom.

The correct answer is:d. The $150,000 § 736(a) payment will result in a capital gain to…

Answered: Tom, Tina, Tatum, and Terry are equal…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Chen, Korhonen, Lebuca, and Swid are partners who share profits and losses on a 4:3:2:1 basis, respectively. They are beginning to liquidate the business. At the start of this process, capital balances are Chen, capital Korhonen, capital Lebuca, capital Swid, capital Required: $ 68,000 29,400 51,000 22,400 Prepare a predistribution plan to determine which partner will be the first to receive cash from the liquidation and what amount that partner will receive before other partners receive any cash. Note: Amounts to be deducted should be entered with a minus sign. Beginning balances Assumed loss Balances Assumed loss Balances Assumed loss Balances Chen Korhonen Lebuca Swid $ 68,000 $ 29,400 $ 51,000 $ 22,400

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