Annabelle, Bebe and Chris were equal owners of the Gen. Jackson partnership. On July 1, Jackson made a distribution to the partners. On July 1, it gave each partner $5000 cash, and corporate stock. The corporate stock received by each partner had a basis of $2500, and the fair market value of $5000. Annabelle, Bebe and Chris have outside basis in their partnership interest as follows:

Annabelle: Bebe Chris

$10,000.00 $5,000.00 $2,500.00

Here's the partnership balance sheet immediately before the distribution:

Assets

Cash

Accounts Receivable Inventory

Stock investment Building

A.B. FMV $25,000 $25,000 0 $10,000 $10,000 $15,000 $15,000 $30,000 $5,000 $25,000

1. Describe the tax effect on the distributions to Annabelle, Bebe and Chris
2. What would be the result to Chris if she receives the stock first, and then receives the cash later in a
3. separate distribution on November 1?
4. What will be the result to Chris in part (b) above if the cash distribution on November 1 is a draw

against her share of partnership income, which is $10,000 for the year?