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Randolph is a 30 percent partner in the RD Partnership. On January 1, RD distributes $18,000...

Randolph is a 30 percent partner in the RD Partnership. On January 1, RD distributes $18,000 cash and inventory with a fair value of $42,400 (inside basis of $21,200) to Randolph in complete liquidation of his interest. RD has no liabilities at the date of the distribution. Randolph's basis in his RD Partnership interest is $41,650. What is the amount and character of Randolph's gain or loss on the distribution? Multiple Choice $0 gain or loss. $18,750 capital gain. $18,750 capital loss. $2,450 capital loss.

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Answer #1

$0 gain or loss

Explanation: As sum received by partner on retirement is exempt from capital gains tax, so no gain no loss the distribution.

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