Let's now apply the concepts of condition five to Sunchaser Shakery. Assume Sunchaser Shakery partnership distributes the following to Nicholas in liquidation of his ownership interest: cash of $187,000, property A of the fair market value of $7,000 and adjusted basis of $10,000, property B the fair market value of $18,000 and adjusted basis of $10,000, an inventory the fair market value of $102,000 and adjusted basis of $70,0000. Nicholas's outside basis is $334,0000 including his share of $66,0000 of Sunchaser debt, and we want to determine the tax effects of the liquidation for Nicholas. Condition five is applicable here because we have a distribution of other property, and the outside basis is less than the inside basis of the distributed assets. So we're going to allocate the basis as in condition four, but now with respect to other property instead of hot assets. But we still start in the same beginning point as we often do, which is beginning with how much basis do we need to allocate. So we look at the basis before the distribution of 334,000. Factor in the debt relief, which is treated as a cash distribution, 66,000. And so we have a basis to allocate of $268,000. And so now we allocate this remaining $268,000 to the distributed assets using the three step process. So we start in step one, where we assign inside basis to the distributed assets. So, beginning with our basis to allocate of $268,000, we assign some basis to cash of 187,000, some initial basis to A of 10,000, initial to B 10,000, and initial basis to inventory. And so summing all this up, we see that we have a required basis decrease that we must make of $9,000. And so now in step two, we'll allocate the remaining decrease to property with unrealized appreciation to the extent of the unrealized appreciation. So, we'll allocate a portion to A because it has unrealized depreciation, its fair market value is $7,000 and its adjusted basis is 10, and it's the only asset that has depreciated in value. So, it's the only one that we need to consider in step two. So, we allocate $3,000 dollars to this asset. So, we have a remaining decrease now of 6,000, and then just to track it, we have an interim basis sort of a subtotal at this step of A, property A of $7,000, which was the 10 we initially assigned to it less the $3,000 decrease we just assign in this step, step two. Now, we go to step three, where we're going to allocate the remaining decrease to property in relation to their adjusted basis. So, allocate a portion to property item A, and we have $6,000 of decrease left to allocate, and we'll do this on the basis of adjusted basis. And so the interim basis of property item A is seven thousand dollars, which we computed in the prior step, and we'll do that over the sum of the 7,000 plus the basis of B, which is 10. And so we get 2470 being allocated to A, and will allocate the remaining amount to B, which would be 3530, but to be formal, we can write it out to say it would be the $6,000 times 10,000 over 7,000 plus 10,000 in that proportion. So, we can take 6,000 minus these two amounts, we see that we've fully allocated all of the remaining decrease. And so we can summarize our answer by looking at the final basis amounts for each of the assets. Cash would be $187,000, property item A would be 4,350, which begins with our interim basis in step two less the 2470 adjustment that we made in step three, and property item B would be 6470. Be the $10,000 that we initially assigned less the adjustment from step three of 3,530. And then finally, the inventory of 70,000. And as before, we have no gain or loss to recognize on the transaction.