In a proportionate liquidating distribution in which the partnership is also liquidated, Ralph received cash of $30,000, accounts receivable (basis of $0, fair market value of $20,000), and land (basis of $1,000, fair market value of $10,000). Immediately before the distribution, Ralph's basis in the partnership interest was $40,000 . Ralph realizes and recognizes a loss of $9,000, and his basis

is $0 in the accounts receivable and $1,000 in the land.
a. True
b. False
Indicate whether the statement is true or false

False
RATIONALE: A loss can only be recognized in a liquidating distribution from a partnership if the only assets distributed are cash, unrealized receivables, and inventory. In this distribution, Ralph also received a parcel of land, so the loss is not deductible. Ralph's basis is reduced to $10,000 by the cash distribution. The accounts receivable take a carryover basis of $0 . Because this is a liquidating distribution, Ralph's remaining basis in the partnership interest of $10,000 is allocated to the land, and no loss is recognized.