The XYZ Partnership owns the following assets on December 31: \[\begin{array} { | l | r | r | } \hline & { \text { Basis } } &{ \text { FMV } } \\ \hline \text { Cash } & \$ 10,000 & \$ 10,000 \\ \hline \text { Unrealized receivables } & 0 & 10,000 \\ \hline \text { Inventory } & \$ 25,000 & 30,000 \\ \hline \end{array}\] A partner has a 20% interest with a basis of $6,000 in XYZ before receiving a liquidating distribution of $10,000 cash.XYZ Partnership has no liabilities.His recognized gain is

A) $4,000 capital gain. B) $3,000 capital gain and $1,000 ordinary income. C) $3,000 ordinary income. D) $3,000 ordinary income and $1,000 capital gain. A) $4,000 capital gain. B) $3,000 capital gain and $1,000 ordinary income. C) $3,000 ordinary income. D) $3,000 ordinary income and $1,000 capital gain.

Steve sells his 20% partnership interest having a $28,000 basis to Nancy for $40,000 cash.At the time of the sale,the partnership has no liabilities and its assets are as follows: \[\begin{array} { | l | r | r | } \hline & \text { Basis } & { \text { FMV } } \\ \hline \text { Cash } & \$ 20,000 & \$ 20,000 \\ \hline \text { Unrealized receivables } & 0 & 40,000 \\ \hline \text { Inventory } & 10,000 & 40,000 \\ \hline \text { Land (Sec. 1231) } & 110,000 & 100,00 \\ \hline \end{array}\] The receivables and inventory are Sec.751 assets.There is no agreement concerning the allocation of the sales price.Steve must recognize

A) no gain or loss. B) $12,000 ordinary income. C) $12,000 capital gain. D) $14,000 ordinary income and $2,000 capital loss. A) no gain or loss. B) $12,000 ordinary income. C) $12,000 capital gain. D) $14,000 ordinary income and $2,000 capital loss.

The LM Partnership terminates for tax purposes on July 15 when Latasha sells her 60% capital and profits interest to Zoe for $100,000.The partnership has no liabilities,and its assets at the time of termination are as follows: \[\begin{array} { | r | r | r | } \hline \text { Assets } &{ \text { Basis } } & { \text { FMV } } \\ \hline \text { Cash } & \$ 20,000 & \$ 20,000 \\ \hline \text { Receivables } & 10,000 & 12,000 \\ \hline \text { Inventory } & 22,000 & 28,000 \\ \hline \text { Building } & 80,000 & 85,000 \\ \hline \text { Land } & 30,000 & 21,667 \\ \hline \text { Total } & \$ 162,000 & \$ 166,667 \\ \hline \end{array}\] Marika,a 40% partner in the LM Partnership,has a $64,800 basis in her partnership interest (outside basis)at the time of the termination.She has held her LM Partnership interest for three years at the time of the termination.The basis of Marika and Zoe in the new LM Partnership is:

A) \[\begin{array} { | l | l | } \hline \text { Marika } & \text { Zoe } \\ \hline \$ 64,800 & \$ 97,200 \\ \hline \end{array}\] B) \[\begin{array} { | l | l | } \hline \text { Marika } & \text { Zoe } \\ \hline \$ 66,667 & \$ 100,000 \\ \hline \end{array}\] C) \[\begin{array} { | l | l | } \hline \text { Marika } & \text { Zoe } \\ \hline \$ 64,800 & \$ 100,000 \\ \hline \end{array}\] D) \[\begin{array} { | l | l | } \hline \text { Marika } & \text { Zoe } \\ \hline \$ 66,667 & \$ 97,200 \\ \hline \end{array}\] A) \[\begin{array} { | l | l | } \hline \text { Marika } & \text { Zoe } \\ \hline \$ 64,800 & \$ 97,200 \\ \hline \end{array}\] B) \[\begin{array} { | l | l | } \hline \text { Marika } & \text { Zoe } \\ \hline \$ 66,667 & \$ 100,000 \\ \hline \end{array}\] C) \[\begin{array} { | l | l | } \hline \text { Marika } & \text { Zoe } \\ \hline \$ 64,800 & \$ 100,000 \\ \hline \end{array}\] D) \[\begin{array} { | l | l | } \hline \text { Marika } & \text { Zoe } \\ \hline \$ 66,667 & \$ 97,200 \\ \hline \end{array}\]