23. LO.5, 6 The BCD Partnership plans to distribute cash of $20,000 to partner Brad at the end of the tax year. The partnership reported a loss for the year, and Brad’s share of the loss is $10,000. Brad holds a basis of $15,000 in the partnership interest, including his share of partnership liabilities. The partnership expects to report substantial income in future years.

a. How does Brad calculate the ending basis in the BCD Partnership interest?

b. How much gain or loss must Brad report for the tax year due to the distribution?

c. Will the deduction for any of the $10,000 loss be suspended? Why or why not?

d. Could any planning opportunities be used to minimize the tax ramifications of the distribution? Explain.