Question
Maggie has a 25% interest in the JW partnership. Her outside basis is $500. The partnership liquidates distributing to Maggie $300 in cash and inventory
Maggie has a 25% interest in the JW partnership. Her outside basis is $500. The partnership liquidates distributing to Maggie $300 in cash and inventory with an inside basis of $125. How does Maggie report this transaction for tax purposes in the year she receives the distributions? Include whether Maggie recognizes gain or loss, and what Maggies basis is in the inventory. A: Suppose Maggie from the previous problem receives $300 in cash but the inside basis of the inventory is $25. Her outside basis is still $500. Does Maggie recognize gain or loss (if so how much) and what is her basis in the inventory? B: Suppose Maggie receives $300 in cash, inventory with an inside basis of $150, and a plot of land in a swamp with an inside basis of $50. Her outside basis is still $500. Does Maggie recognize gain or loss (how much?) on the distribution, and what is her basis in the inventory and in the land? C: Suppose Maggie outside basis is still $500. She receives cash of $300, and inventory with an inside basis of $225. Does Maggie recognize gain or loss (how much?) and what is her basis in the inventory?
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