Question

What are the two types of distributions in liquidation?

1) Complete liquidation and nonliquidating
2) Zero out to get out and Stop at Zero
3) Basis Used = Partnership interest and Basis used = NBV Asset taken
4) Must Zero-Out Account and Stop at Zero

Answer 1

The two types of distributions in liquidation are complete liquidation and nonliquidating distributions. Complete liquidation ends the business, while nonliquidating distributions involve a partner's withdrawal but the business continues to operate.

Step-by-step explanation:

When discussing the two types of distributions in liquidation, they are typically referred to as complete liquidation and nonliquidating distributions. In a complete liquidation, a business ceases operations and disposes of its assets, paying off creditors and distributing the remainder to its shareholders or partners. A nonliquidating distribution occurs when a partner withdraws from the partnership and receives a distribution of assets, but the partnership itself continues to operate.