Disproportionate liquidating distributions


16-Feb-2020 18:33

Before the distribution, Andy's share of appreciation in this stock was 0 [10% x (,000 - ,000)].His share of appreciation in the stock retained by the partnership is

Andy is treated as if he received a cash distribution of

Before the distribution, Andy's share of appreciation in this stock was $600 [10% x ($10,000 - $4,000)].His share of appreciation in the stock retained by the partnership is $0, since he no longer owns an interest in the partnership.The portion of the security value treated as money is reduced by a proportionate share of the appreciation inherent in the distributed security.The amount of the reduction is the excess of (1) the partner's share of appreciation in this particular security before the distribution, over (2) the partner's share of appreciation in the portion of the security retained by the partnership.Some or all of the value of the security over the partner's outside basis prior to the distribution is a taxable gain.

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Before the distribution, Andy's share of appreciation in this stock was $600 [10% x ($10,000 - $4,000)].

His share of appreciation in the stock retained by the partnership is $0, since he no longer owns an interest in the partnership.

The portion of the security value treated as money is reduced by a proportionate share of the appreciation inherent in the distributed security.

The amount of the reduction is the excess of (1) the partner's share of appreciation in this particular security before the distribution, over (2) the partner's share of appreciation in the portion of the security retained by the partnership.

Some or all of the value of the security over the partner's outside basis prior to the distribution is a taxable gain.

,400.Example: In 2006, Rod contributes nondepreciable property with an adjusted basis of ,000 and a fair market value of ,000 to the Rock Partnership, in exchange for a one-fourth interest in profits and capital.In 2007, when the property's fair market value is ,000, the partnership distributes the property to Hong, another one-fourth partner.Janet reports a nontaxable transfer of one-fourth of the land to the partnership under 721, and a sale of three-fourths of the land for 0,000.

, since he no longer owns an interest in the partnership.The portion of the security value treated as money is reduced by a proportionate share of the appreciation inherent in the distributed security.The amount of the reduction is the excess of (1) the partner's share of appreciation in this particular security before the distribution, over (2) the partner's share of appreciation in the portion of the security retained by the partnership.Some or all of the value of the security over the partner's outside basis prior to the distribution is a taxable gain.

disproportionate liquidating distributions-22

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Andy is treated as if he received a cash distribution of

Andy is treated as if he received a cash distribution of $1,400.

Example: In 2006, Rod contributes nondepreciable property with an adjusted basis of $10,000 and a fair market value of $40,000 to the Rock Partnership, in exchange for a one-fourth interest in profits and capital.

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Andy is treated as if he received a cash distribution of $1,400.Example: In 2006, Rod contributes nondepreciable property with an adjusted basis of $10,000 and a fair market value of $40,000 to the Rock Partnership, in exchange for a one-fourth interest in profits and capital.In 2007, when the property's fair market value is $50,000, the partnership distributes the property to Hong, another one-fourth partner.Janet reports a nontaxable transfer of one-fourth of the land to the partnership under 721, and a sale of three-fourths of the land for $150,000.

,400.

Example: In 2006, Rod contributes nondepreciable property with an adjusted basis of ,000 and a fair market value of ,000 to the Rock Partnership, in exchange for a one-fourth interest in profits and capital.



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