Question - John received a proportionate non-liquidating distribution of $10,000 cash and inventory with a zero basis and a fair market value of $12,000 from a partnership in which he has a basis of $8,000.
What are the tax effects of these distributions?
How would your answer change if this was a liquidating distribution?
How would your answer change on the non-liquidating and liquidating distributions if his basis in the partnership was $15,000?