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Homework answers / question archive / The SLD Partnership distributes the following property to Swindler in a distribution that liquidates Swindler’s interest in the partnership

The SLD Partnership distributes the following property to Swindler in a distribution that liquidates Swindler’s interest in the partnership

Accounting

  1. The SLD Partnership distributes the following property to Swindler in a distribution that liquidates Swindler’s interest in the partnership. Assume that no Sec. 754 election is in effect. Swindler’s basis in his partnership interest before the distribution is $69,000. The adjusted bases and FMVs of the distributed property to the partnership before the distribution are as follows:

 

Assets

Basis

FMV

Cash

$5,000

$5,000

Inventory

16,000

18,000

Capital Asset 1

20,000

30,000

Capital Asset 2

40,000

35,000

Total

81,000

88,000

Determine Swindler’s basis in each distributed asset. Show computations for full credit

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Calculation of Swindler's basis in each distributed asset

First of all, we have to find percentage of share of Swindler in SLD Partnership

% of share of Swindler = 69,000/81,000*100 = 85.19%

Calculation of Swindler's Basis in each distributed asset

Asset Swindler's Share
Cash $5,000*.8519 = $4,259.5
Inventory $16,000*.8519 = $13,630.4
Capital asset 1 $20,000*.8519 = $17,038
Capital asset 2 $40,000*.8519 = $34,072
  69,0000 (approx)

Calculation of Swindler's Basis in each distributed asset on basis of FMV

Asset Swindler's Share
Cash $5,000*.8519 = $4,259.5
Inventory $18,000*.8519 = $15,334.2
Capital asset 1 $30,000*.8519 = $25,557
Capital asset 2 $35,000*.8519 = $29,816.5
  = $74,967.2

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