1. Under which of the following circumstances will a partner recognize a loss from a liquidating distribution?

1. A partner will never recognize a loss from a liquidating distribution
2. A partner will recognize a loss from a liquidating distribution when the partnership distributes category 3 assets with an inside basis less than the partners basis in the partnership interest.
3. A partner will recognize a loss from a liquidating distribution when the partnership distributes money in an amount that is less than the partners basis in the partnership interest.
4. A partner will recognize a loss from a liquidating distribution when the partnership distributes money in an amount that is greater than the partners basis in the partnership interest.
5. None of these