Partnership Basis in Land
Betty's basis in her partnership interest is $90,000 and she receives distributions of $35,000 cash and inventory (basis to the partnership of $22,000 and a fair market value of $28,000). No land is distributed.
(A) How much gain or loss, if any, must Betty recognize as a result of the distribution.
(B) What basis will Betty take in the inventory?
(C) What are the tax consequences to the partnership.
(D) Can you recommend an alternate distribution?
(E) Would your answer to (A) or (B) change if this had been a nonliquidating distribution?
In a 319 word solution, the questions are answered with enough detail for full understanding. References to Code section are cited to explain the tax treatment of the various scenarios. Discussion about basis for distributions of cash and inventory are explained as well as the taxable event, if applicable.
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