Items 1 and 2 are based on the following data:
Mike Reed, a partner in Post Co., received the following distribution from Post:
|
Post’s basis |
Fair market value |
|
|
Cash |
$11,000 |
$11,000 |
|
Land |
5,000 |
12,500 |
Before this distribution, Reed’s basis in Post was $25,000.
If this distribution were nonliquidating, Reed’s recognized gain or loss on the distribution would be
- $11,000 gain.
- $ 9,000 loss.
- $ 1,500 loss.
- $0.
If this distribution were in complete liquidation of Reed’s interest in Post, Reed’s basis for the land would be
- $14,000
- $12,500
- $ 5,000
- $ 1,500