Cliff’s basis in his Aero Partnership interest is $11,000. Cliff receives a distribution of $22,000 cash from Aero in complete liquidation of his inte
Cliff’s basis in his Aero Partnership interest is $11,000. Cliff receives a distribution of $22,000 cash from Aero in complete liquidation of his interest. Aero is an equal partnership with the following balance sheet:
\r\nAssets: Tax Basis FMV
\r\nCash $ 22,000 $ 22,000
\r\nInvestment 8,800 8,800
\r\nLand 2,200 35,200
\r\nTotals $ 33,000 $ 66,000
\r\nLiabilities and capital:
\r\nCapital- Chris 11,000
\r\n- Cliff 11,000
\r\n- Cooper 11,000
\r\nTotals $ 33,000
\r\na. What are the amount and character of Cliff’s recognized gain or loss? What is the effect on the partnership assets?
\r\nb. If Aero has a §754 election in place, what is the amount of the special basis adjustment?
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