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Randolph is a 30 percent partner in the RD Partnership. On January 1, RD distributes $24,500 cash and inventory with a fair value of $23,600 (inside basis of $11,800) 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 $39,725. What is the amount and character of Randolph's gain or loss on the distribution

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Answer:

3425 LOSS

Explanation:

Randolph gain or loss can be calculated as

Gain/loss = Cash distribution + Inventory distribution - Basis in RD

Gain/loss =  $24,500 + $11,800 - $39,725

Gain/loss = (3425) LOSS

As You can see RD distributing cash and inventory and they are less than his basis in RD

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