Fair Market Value
Cash $30,000 $30,000
Accounts Receivable 0 60,000
Total Assets $30,000 $90,000
Capital – Betty $10,000 $30,000
Capital – Carry 10,000 30,000
Capital- Darry 10,000 30,000
Distribution of one-half of the receivables to Betty:
Betty’s interests before and after the distribution:
Pre-Distribution Post-Distribution Change
Ordinary Income Assets:
Accounts Receivable $20,000 $30,000 $10,000
Other Assets:
Cash $10,000 0 (10,000)
a)What are the tax consequences to Betty?
b)Will Code Section 751(b) apply? If so, why? If not, why not?
Hi there! Click one of our representatives below and we will get back to you as soon as possible.