Question

At a time when Nedra's basis in her partnership interest was $5:000, she received a current distribution of $6,000 cash, and land with an adjusted basis of $2 000 and a fair market value of $3,000 The partnership had no unrealized receivables or substantially appreciated inventory. What is the result of this distribution to Nedra?

Answer 1

Answer:

$1,000 capital gain, $0 basis in land, $0 basis in partnership interest.

Explanation:

Based on the information given we were that she received the amount of $6,000 when she already had the amount ofb $5,000 as the basis in the partnership interest which means that she will recognize the amount of $1,000 as her CAPITAL GAIN

Secondly her basis in the land will be $0 basis reason been that any basis of property that is been received in a distribution will not be higher than the bais of the partner's in the partnership interest

Lastly her basis in the partnership interest will as well be $0 basis reason been that her own share of the money given to her reduced her basis in the partnerbership