Proportionate nonliquidating distribution
Unrealized receivables are rights to receive future amounts that will result in ordinary income when the income is recognized.
Inventory, as the term is used here, has a much broader meaning than usual.
This second type of liquidating distribution occurs, for example, when a partner retires from a partnership, or when a deceased partner’s interest is liquidated.
The two types of liquidating distributions receive differing tax treatment, as later sections of the chapter will explain.
Installment gains are unrealized receivables if the gain will be taxed as ordinary income when realized.
,45 Stephanie receives a proportionate nonliquidating distribution from the QRS Partnership.
,50 Andrew receives a proportionate nonliquidating distribution from the AEF Partnership.
After the distribution, Megan’s bases in the land and inventory are, respectively:a. What basis does Martin take in the inventory and land and in the partnership interest following the distribution? ,000 basis in inventory; ,000 basis in land, ,000 basis in partnership. ,000 basis in inventory; ,000 basis in land, ,000 basis in partnership. ,000 basis in inventory; ,000 basis in land, ,000 basis in partnership. ,000 basis in inventory; ,000 basis in land, ,000 basis in partnership. ,000 basis in inventory; ,000 basis in land, ,000 basis in partnership.1185.
The distribution consists of ,000 cash and property (adjusted basis to the partnership of ,000 and fair market value of ,000).
Finally, a distribution may be either proportionate or disproportionate.
In a occurs when the distribution increases or decreases the distributee partner’s interest in certain ordinary income-producing assets.
Unrealized receivables include receivables from the sales of ordinary income property and rights to payments for services.
For some purposes, unrealized receivables also include ordinary recapture income that would arise if the partnership sold its depreciable assets.
If the partnership makes an , the inside basis of the partnership property can be adjusted to reflect the purchase price paid by the partner.