[k1zuna]

I know cash distribution is before property distributions. But what’s the order for property distributions if the question doesn’t specify? Is it: A/R -> inventory -> all other assets?

FAR - Passed
AUD - Passed
BEC - Passed
REG - 8/22/2013

[Heidi-O]

@k1zuna I don't know if I can help, but A/R and inventory are classified as Hot Assets. They are treated as ordinary income as if cash was received. Unrealized (cash basis) receivables (as if exchanged for cash), Appreciated inventory (as if exchanged for cash) and Recapture Income regarding depreciable assets owned by the partnership (haven't seen any question with this one in it).

So, if “Hot Assets” are the equivalent as being exchanged for cash, I would assume they would be next line from cash.

I could Easily be wrong – but try that in your questions. I think it is because Receivables are cash income that will be paid to you (or could be factored for cash) and inventory could be sold for cash. Also, the difference in your basis in the partnership and the hot assets received are recorded as Ordinary Income not Capital Income. I would assume the FMV of property would be left – BUT I could be completely wrong. Just try it out and see.

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[barelystayingsane]

@k1zuna From doing the Becker practice problems, the only order I was able to get was Cash, then Inventory, then Land. No idea about any of the other accounts haha This may be a good question to email Becker about to get clarification.

I'm inclined to agree with Heidi-O on this. Her answer makes a lot of logical sense, especially given that I know that inventory is second on the order list.

[Anonymous]

the order is:

cash->unrealized accounts receivable/appreciated inventories->other property

good luck with 0806 appointment, mine is 0811.

[Author]

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