For each question on, you should assume that:

* unless expressly stated to the contrary, all events occurred in the current taxable year;

* all persons are United States citizens;

* there is no tax avoidance purpose for any transaction, and that with respect to any mortgage on any property, there was a bona fide business purpose for incurring or assuming the debt;

* unless expressly stated to the contrary, the partnership has no hot assets, has no debts or other liabilities, and does not have a Section 754 election in effect;

* each partnership is a general partnership;

* there are no special allocation provisions contained in any partnership agreement; and

* unless expressly stated to the contrary, or the context of the questions requires a conclusion that the distribution was not pro rata - such as the liquidation of the interest of just one partner, all partnership distributions were pro rata.

10. Rex contributed land to the partnership of Rex, Tex, and Lex Partnership in exchange for a one-third interest in the Partnership. Rexs adjusted basis in the land was $50,000 and its fair market value was $75,000. Rexs Partnership capital account was credited with $75,000. Tex and Lex had each contributed $75,000 cash. Thus, each partners capital account was $75,000. What is Rexs adjusted basis (outside basis) in his partnership interest?

a. $75,000

b. $50,000.

c. $37,500

d. cannot be determined from the facts stated

11. Ten years ago, Lisa acquired a one-third interest in Dee Associates, a general partnership. In the current taxable year, when Lisas entire interest in the partnership was liquidated, Dee Associates assets consisted of cash of $20,000 and tangible property with an adjusted basis to the partnership of $46,000 and a fair market value of $40,000 on the date of distribution. Dee Associates had no liabilities. Lisas adjusted basis in her one-third interest in the partnership was $22,000. Lisa received cash of $20,000 in complete liquidation of her entire interest. How much loss will Lisa recognize upon receipt of the liquidating distribution?

a. 0

b. $2,000 short-term capital loss

c. $2,000 long-term capital loss

d. $2,000 ordinary loss

12. Mark, Pete and Mickey are equal partners in the 2MP Partnership, a general partnership. On January 1, 2014, Marks adjusted basis in his partnership interest was $15,000, Petes adjusted basis in his partnership interest was $10,000, and Mickeys adjusted basis in his partnership interest was $20,000. The partnership had taxable income of $30,000 in 2014 which was allocated equally among the partners. On December 31, 2014, the partnership made a non-liquidating distribution of $25,000 cash to Pete. How much income or gain did Pete recognize as a result of the distribution?

a. 0

b. $5,000

c. $15,000

d. $25,000