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Business, 07.05.2020 09:03 rsetser6989

Sarah is a 50% partner in the SF Partnership and has an outside basis of $56,000 at the end of the year prior to any distributions. On December 31, Sarah receives a proportionate operating distribution of $20,000 cash. What is the amount and character of Sarah's recognized gain or loss and what is her basis in her partnership interest?

A) $0 gain, $36,000 basis.

B) $20,000 ordinary income, $56,000 basis.

C) $0 gain, $56,000 basis.

D) $20,000 ordinary income, $36,000 basis.

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