Note: use the following fact pattern for the next two questions.   Bonnie is a partner in a general partnership in which she has an outside basis of $22,000 at the end of the year (prior to any distributions). On December 31, Bonnie receives a proportionate nonliquidating distribution of $16,000 cash and property with a $13,000 fair value and a $9,000 basis to the partnership.   What is the amount and character of Bonnie’s gain or loss on the distribution?

Note: use the following fact pattern for the next two questions.   The tax basis balance sheet for Boxelder, a general partnership on the cash method of accounting, includes the following assets and liabilities on January 1 of this year:   Fair valueAdjusted basisAssets: Cash$180,000$180,000 Accounts receivable$60,000$0 Land$90,000$120,000 Total$330,000$300,000Liabilities: Mortgage $24,000$24,000 Total$24,000$24,000   Wanda, a partner with a 33.33 percent capital and profits interest, sells her entire partnership interest to Valerie for $102,000 cash plus the assumption of her share of Boxelder’s liabilities.   If Wanda had a basis in her partnership interest of $100,000 on January 1, what is the amount and character of Wanda’s gain or loss on the sale of her interest?

At the beginning of this year, Tobias’s basis in his Pine, Inc. (an S corporation) stock was $27,000. Tobias had previously made a direct loan to Pine of $10,000. During the year, Pine reported an $80,000 ordinary business loss and no separately stated items. If Tobias is a 50 percent owner of Pine, how much of the ordinary loss may he deduct?

Dogwood, Inc., an S corporation, makes a nonliquidating distribution of equipment to its sole shareholder, Debby. The equipment distributed to Debby has a fair value of $40,000 and a basis of $5,000. At the time of the distribution, Dogwood has no accumulated E&P and Debby has a basis of $50,000 in her stock. What is Debby’s beginning basis in the distributed equipment?

Note: use the following fact pattern for the next two questions.   Alex is a partner with a 30 percent capital and profits interest in Maple, a limited partnership, when he sells his entire interest on January 1 for $110,000. At the time of the sale, Alex’s basis in the partnership is $60,000.   If Maple does not have any debt or hot assets, what is the amount and character of Alex’s gain or loss on the sale of his interest?

Note: unless otherwise stated, assume for the following questions involving nonliquidating distributions that (1) no contributed property was distributed, (2) all precontribution gain was recognized before the distribution, and (3) the distribution is pro rata.   Colin is a partner in a general partnership in which he has an outside basis of $56,000 at the end of the year (prior to any distributions). On December 31, Colin receives a proportionate nonliquidating distribution of $6,000 cash and property with a $14,000 fair value and an $8,000 basis to the partnership. How much gain or loss must Colin recognize, and what is his outside basis after the distribution?

Lisa and Richard wish to acquire Acacia Corp., a C corporation. As part of their discussions with Tobias, the sole shareholder of Acacia, they examined the business’ tax accounting balance sheet. The relevant information is summarized as follows:     Fair value Adjusted basis Assets:     Cash $30,000 $30,000 Equipment $70,000 $10,000 Building1 $260,000 $140,000 Land1 $410,000 $180,000 Total $770,000 $360,000       Liabilities:     Payables $20,000 $20,000 Mortgage1 $150,000 $150,000 Total $170,000 $170,000   1 Mortgage is attached to the building and the land.   Tobias’ basis in the Acacia stock is $400,000. Lisa and Richard offer to pay Tobias $900,000 for his company.   [question 3 of 4] How much gain or loss must Acacia recognize if the transaction is structured as a direct asset sale to Lisa and Richard (and they assume Acacia’s liabilities)?

Jerry owns all the stock of Silverbell Corp., an S corporation. Jerry’s basis for the 100 shares is $10,000. On August 25 of this year (assume August is the 237th day of the year, a non-leap year), Jerry gifts 30 shares of stock to his older sister. Silverbell reports $400,000 of ordinary income this year. How much income is allocated to Jerry?

Nicole and Paula each own 50 percent of Magnolia, an S corporation. Magnolia reported the following revenues and expenses:   Sales revenue – $720,000 Cost of goods sold – ($200,000) Depreciation expense (MACRS) – ($12,000) Sec. 179 expense – ($44,000) Long-term capital gains – $8,000 Qualified dividends – $5,000 Nontaxable interest income – $3,000 Salary to owners – ($120,000) Employee wages (excluding salaries to owners) – ($50,000)   In addition, Nicole and Paula each received distributions of $10,000 from Magnolia.   (1) How much ordinary business income is allocated to Nicole?   (2) What are the separately stated items allocated to Nicole?   (3) If Nicole’s basis in her Magnolia stock at the beginning of the year was $40,000, what is her basis after considering the above items?

Lisa and Richard wish to acquire Acacia Corp., a C corporation. As part of their discussions with Tobias, the sole shareholder of Acacia, they examined the business’ tax accounting balance sheet. The relevant information is summarized as follows:     Fair value Adjusted basis Assets:     Cash $30,000 $30,000 Equipment $70,000 $10,000 Building1 $260,000 $140,000 Land1 $410,000 $180,000 Total $770,000 $360,000       Liabilities:     Payables $20,000 $20,000 Mortgage1 $150,000 $150,000 Total $170,000 $170,000   1 Mortgage is attached to the building and the land.   Tobias’ basis in the Acacia stock is $400,000. Lisa and Richard offer to pay Tobias $900,000 for his company.   [question 2 of 4] How much gain or loss must Tobias recognize if the transaction is structured as a stock sale to Lisa and Richard?