solve and compute

Code References: SS 751(b) and 702(a)(7) Regulations: SS 1.751-1(b) and 1.751-1(g) example (2) QUESTIONS 1. The ABCD partnership has the following balance sheet: Fair Market Assets Adjusted Basis Value Cash $240 $240 Inventory 60 100 Capital Asset X 100 260 $400 $600 [Table continued on next page.] 13P-1Preview File Edit View Go Tools Window Help .. . 73%O Problem Case 7.pdf (page 4 of 5) Sun Mar 28 9:34 Scooby Q Q. Search 13P-2 DISTRIBUTIONS FROM COLLAPSIBLE PARTNERSHIP Fair Market Value Capital Adjusted Basis $100 $150 100 150 100 150 100 150 $400 $600 The adjusted basis of each partner's partnership interest is $100. A's interest is terminated when the partnership distributes $150 cash to him. a. What is A's taxable gain on the distribution? What is the character of this gain? b. What is the gain to the partnership on this distribution? What is the charac- ter of this gain? c. What is the partnership's adjusted basis in the inventory following the distribution? d. What is the reconstructed tax balance sheet of the partnership following the distribution?Sun Mar 28 9:34 Scooby Q Preview Edit View Go Tools Window Help 73%O .. . Problem Case 7.pdf (page 4 of 5) Q. Search 2. A, B, C, and D are equal partners of the ABCD partnership. Each partner con- tributed $100 cash to the partnership. At the present time, ABCD's balance sheet is as follows: Fair Market Assets Adjusted Basis Value Inventory $ 40 $150 Capital Asset X 360 650 $400 $800 Capital $100 WD $200 100 200 100 200 100 200 $400 $800 The adjusted basis of each partner's partnership interest is $100. It is agreed that the partnership will distribute the inventory to A in partial liquidation of her interest. Following the distribution, A's interest in the capital, profits, and losses of the partnership will be reduced from one-fourth to one-thirteenth,Preview File Go Tools Window Help 73%O Sun Mar 28 9:34 Scooby Q Edit View .. . Problem Case 7.pdf (page 5 of 5) Q. Search 13P-3 PROBLEM 13 and the interests of B, C, and D each will be increased from one-fourth to four-thirteenths. a. What will be the amount and character of A's taxable gain on the transac- tion? b. What will be the amount and character of the taxable gain to B, C, and D on the transaction? c. What will be ABCD's adjusted basis in Capital Asset X following the distribution? d. What will be A's adjusted basis in the inventory following the distribu- tion? e. What will be the adjusted bases of A, B, C, and D's partnership interests following the distribution