Can Form 1120 Schedule M 3 Receivable 2019-2024

Let's do this again, but now let's look at a liquidating distribution. Basically, what it means is that the partner got kicked out, so their ownership has to go to zero. Their ownership, which is their outside basis, has to go to zero. So, let's start over here. This is called a liquidating distribution. Alright, so my outside basis is ten. In the first case, I'm going to get cash of two, and then fifteen. So, I'm going to get cash of two, but this has to go to zero, so I have an eight dollar loss. That's going to be an eight dollar loss. Okay, so that's going to be a capital loss. Instead, I have a basis of ten. I get 15, which has to go to zero. I have a five-dollar capital gain. Okay, property outside basis is ten. Here is the inside basis again, which is the basis of the property inside the partnership. It's either two or it's fifteen. When I receive this property, this has to go to zero. What does that mean? It means you always pick it up for what the outside basis is. Why? Because you cannot have a gain or loss on property. Remember, no gain or loss on property. So, what is that saying? No gain or loss on price. You could have a gain or loss on cash. Cash is king. Cash is cash, but no gain or loss on property. If it is a liquidating distribution, you're withdrawing, you're leaving. Bye-bye, bye-bye, bye-bye. Right, you're going bye-bye, which means this has to go to zero. It's got to go to zero. What does that mean? It means that if it's property, forget inside, always pick it up for outside basis. What if it's non-liquidating? Then you pick it up...