Mike Reed, a partner in Post Co., received the following distribution from Post
Type of asset / Post's basis / Fair market value
Cash / $11,000 / $11,000
Inventory / $5,000 / $12,500
Before this distribution, Reed's basis in post was $25,000
If this distribution were nonliquidating, Reed's basis for the inventory would be
a. $14,000
b. $12,500
c. $5,000
d. $1,500
Answer: C
CPA Exam
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