MGMT 127B Chapter Notes - Chapter 11: Liquidating Distribution
Document Summary
A routine cash withdrawal paid by a continuing partnership to a continuing partner reduces the partner"s outside basis by the amount of the cash received. The partnership"s inside basis in the asset is similarly reduced. A distribution is a payment from a partnership to a partner with respect to the partner"s ownership interest in the partnership. If a payment is treated as a distribution from the partnership to the partner, it will either be a liquidating or nonliquidating distribution. This depends on whether the partner remains a partner in the partnership after the distribution is made. In general, neither the partner nor the partnership recognizes gian or loss when a proportionate nonliquidating distribution occurs. The partner usually takes a carryover basis for the assets distributed. The distributee partner"s outside basis is reduced by the amount of cash and the adjusted basis of the property distributed to the partner by the partnership.
