The JKLM Partnership owns the following assets on October 1 of the current year:

a. Which partnership items are unrealized receivables?
b. Is the partnership€™s inventory substantially appreciated?
c. Assume the JKLM Partnership has no liabilities and Jack€™s basis in his partnership interest is $76,875. On October 1 of the current year, Jack receives a $25,000 current distribution in cash, which reduces his partnership interest from one-fourth to one-fifth. What are the tax results of the distribution (i.e., the amount and character of any gain, loss, or income recognized and Jack€™s basis in his partnership interest)?

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Assets Partnership's Basis FMV Cash S 48,000 S 48,000 Receivables 12,000 12,000 Inventory 21,000 24,000 Machinerya 190,000 Land 36,500 76.000 Total $400,000 aSale of the machinery for its FMV would result in S50,000 of Sec. 1245 depreciation recapture. Thus, the machinery's FMV and original cost are the same numeric al value, 5240,000.