$(3)$ Neil has a partnership basis of $$100,000.$ He receives $$40,000$ cash, inventory with a basis to the partnership of $$30,000,$ and a capital asset with a partnership basis of $$20,000.$ The inventory and capital asset have fair market values of $$20,000$ and $$30,000,$ respectively.

He will recognize $$ no gain or loss of $ $$ The capital asset is allocated a basis of $ $$ and the inventory will have a basis of $

$(4)$ Oscar has a partnership basis of $$40,000.$ He receives a distribution of $$10,000$ cash and an account receivable with a basis of $$0$ to the partnership $($value is $$15,000).$

He will recognize $$ of $ $$

b$.$ In each of the four situations in part $($a$),$ are any planning techniques available to the partnership to avoid any "lost basis" results?

For any of the four situations, students might answer "make a $754$ election." However, because the partnership is liquidating, this

$$ viable.

c$.$ In the four situations in part $($a$),$ would your answers change if the transaction had been a current distribution?

The results for transaction $(1)$ change since gain recognition rules are $$ for both current and liquidating distributions.

For transactions $(2)$ and $(3),$ the bases of capital assets $$ be adjusted in Step $3$ of a current distribution.

In situations $(2)$ to $(4),$ there $$ gains, losses, or basis adjustments in a current distribution, so $$ adjustment is needed.