Simon is a 30 percent partner in the SBD Partnership, a calendar year end entity As of the end of this year, Simon has an outside basis in his interest in SBD of $188,000, which includes his share of the $60,000 of partnership liabilities On December 31, SBD makes a proportionate distribution of the following assets to Simon Tax Basis FMV Cash $ 40,000 $ 40,000 Inventory 55,000 65,000 Land 30,000 45,000 Totals $ 125,000 $ 150,000 a1 What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is an operating distribution a2 What are the tax consequences (basis in distributed assets) of the distribution to Simon if the distribution is an operating distribution b1 What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is a liquidating distribution b2 What are the tax consequences (basis in distributed assets after allocation) of the distribution to Simon if the distribution is a liquidating distribution

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Simon is a 30 percent partner in the SBD Partnership, a calendar year-end entity. As of the end of this year, Simon has an outside

Simon is a 30 percent partner in the SBD Partnership, a calendar year-end entity. As of the end of this year, Simon has an outside basis in his interest in SBD of $188,000, which includes his share of the $60,000 of partnership liabilities. On December 31, SBD makes a proportionate distribution of the following assets to Simon:

		Tax Basis		FMV
Cash	$	40,000	$	40,000
Inventory		55,000		65,000
Land		30,000		45,000
Totals	$	125,000	$	150,000

a1. What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is an operating distribution?
a2. What are the tax consequences (basis in distributed assets) of the distribution to Simon if the distribution is an operating distribution?
b1. What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is a liquidating distribution?
b2. What are the tax consequences (basis in distributed assets after allocation) of the distribution to Simon if the distribution is a liquidating distribution?