In a Proportionate Liquidating Distribution, Scott Receives a Distribution of $20,000

Multiple Choice

In a proportionate liquidating distribution, Scott receives a distribution of $20,000 cash, accounts receivable (basis of $0 and fair market value of $40,000) , and land (basis of $30,000 and fair market value of $60,000) . In addition, the partnership repays all liabilities, of which Scott's share was $20,000. Scott's basis in the entity immediately before the distribution was $100,000. As a result of the distribution, what is Scott's basis in the accounts receivable and land, and how much gain or loss does he recognize?

A) $0 basis in accounts receivable; $30,000 basis in land; $0 gain or loss.
B) $0 basis in accounts receivable; $60,000 basis in land; $0 gain or loss.
C) $40,000 basis in accounts receivable; $30,000 basis in land; $0 gain or loss.
D) $40,000 basis in accounts receivable; $60,000 basis in land; $20,000 gain.
E) $0 basis in accounts receivable; $80,000 basis in land; $20,000 loss.