Problem NO: 30

Helen’s basis in Haywood Partnership is $270,000. Haywood distributes all the land to Helen in complete liquidation of her partnership interest. The p

Helen’s basis in Haywood Partnership is $270,000. Haywood distributes all the land to Helen in complete liquidation of her partnership interest. The partnership reports the following balance sheet just before the distribution:

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Assets: Tax Basis FMV

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Cash $ 220,000 $ 220,000

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Stock (investment) 480,000 220,000

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Land 110,000 220,000

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   Totals $ 810,000 $ 660,000

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Liabilities and capital:

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Capital- Charles $ 270,000

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- Esther 270,000

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- Helen 270,000

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  Totals $ 810,000

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a. What are the amount and character of Helen’s recognized gain or loss? What is the effect on the partnership assets?

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b. If Haywood has a §754 election in place, what is the amount of the special basis adjustment?

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