When Magdalena's outside basis is $185,000, she receives a liquidating distribution of $46,250 cash and a proportionate share of inventory having a partnership basis of $64,750 and a fair market value of $74,000. The distribution results in a liquidation of both the partnership and her interest. a. How much is Magdalena's basis in the inventory received? $ b. What is the amount of any gain or loss recognized on the liquidation? She has a recognized of $ on the liquidation.

When Magdalena's outside basis is $185,000, she receives a liquidating distribution of $46,250 cash and a proportionate share of inventory having a partnership basis of $64,750 and a fair market value of $74,000. The distribution results in a liquidation of both the partnership and her interest. a. How much is Magdalena's basis in the inventory received? $ b. What is the amount of any gain or loss recognized on the liquidation? She has a recognized of $ on the liquidation.

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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Question

Exercise 11-14 (Algorithmic) (LO. 4)
When Magdalena's outside basis is $185,000, she receives a liquidating distribution of $46,250 cash and a proportionate share of inventory
having a partnership basis of $64,750 and a fair market value of $74,000. The distribution results in a liquidation of both the partnership
and her interest.
a. How much is Magdalena's basis in the inventory received?
$
b. What is the amount of any gain or loss recognized on the liquidation?
of $
She has a recognized
on the liquidation.

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Step 1: Meaning and explanation of Outside basis in a partnership

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Step 2: a. Magdalena's Basis in the Inventory:

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Step 3: b. Unutilized Outside Basis:

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