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Ariel has a basis of $80,000 in the ABC Partnership as of December 31. On that date, the partnership liquidates and distributes to Ariel a
Ariel has a basis of $80,000 in the ABC Partnership as of December 31. On that date, the partnership liquidates and distributes to Ariel a pro rate distribution of $30,000 cash and inventory with a basis to the partnership of $40,000 and a fair market value of $45,000. How much gain or loss will Harry recognize on the distribution, and what basis will he take in the inventory?
a. $10,000 loss; $40,000 basis
b. $0 loss; $50,000 basis
c. $0 loss; $40,000 basis
d. $5,000 loss; $45,000 basis
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