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Glenda received a proportionate nonliquidating distribution from the EFG Partnership. The distribution consisted of $10,000 cash and property with an adjusted basis to the partnership of $34,000 and a fair market value of $42,000. Immediately before the distribution, Glenda’s adjusted basis in her partnership interest was $60,000. How much is Glenda’s basis in the noncash property distributed to her?

a. $10,000

b. $34,000

c. $42,000

d. $50,000

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Jean Keeling
Jean KeelingLv2
29 Sep 2019

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Dolly receives a proportionate, nonliquidating distribution fromthe Melon Partnership. The distribution consists of $40,000 cashand property with an adjusted basis to the partnership of $140,000and a fair market value of $170,000. Immediately before thedistribution, Dolly's adjusted basis for her partnership interestis $160,000. Dolly's basis in the noncash property received is:Select one:

a. $170,000.

b. $120,000.

c. $140,000.

d. $ 40,000.

Liquidations:
Determine whether the following statements are True or False: TRUE FALSE

1. A liquidating cash distribution may reduce the recipient partner's basis below zero.
2. A liquidating distribution of appreciated inventory reduces the recipient partner's basis in his partnership interest to below zero.

3. If a partner has a basis of $15,000 in a partnership, and receives a non liquidating distribution of land with an adjusted basis of $16,000, but a FMV of $18,000, there will be a gain of $1,000.
4. A non liquidating distribution of only cash, may result in a deductible loss.
5. A liquidating distribution of only land, may result in a deductible loss.
6. In a nonliquidating distribution of property, the partner's basis must equal zero.
7. In a nonliquidating distribution, if there is sufficient basis to the partner, the property received will have the same basis to the partner as the property had to the partnership.
8. A partner recognizes a gain on a distribution only to the extent that cash received exceeds the partner's basis in the partnership.

9. Loss is recognized by the partner who receives a nonliquidating distribution of cash, when the amount of cash is less than his basis in the partnership interest before the distribution.
10. If a partner has a basis of $15,000 in a partnership, and receives a nonliquidating distribution of land with an adjusted basis of $16,000, but a FMV of $18,000, the land will have a basis of $15,000.

1. Karli owns a 25% capital and profitsinterest in the calendar-year KJDV Partnership. Her adjusted basisfor her partnership interest on July 1 of the current year is$200,000. On that date, she receives a proportionate nonliquidatingdistribution of the following assets:

Partnership’s Basis in Asset

Asset’s Fair Market Value

Cash

$120,000

$120,000

Inventory

50,000

60,000

Land

70,000

100,000

​

a. Calculate Karli’s recognized gain or loss on the distribution, ifany.

b. Calculate the partnership gain/loss from the distribution

c. Calculate Karli’s basis in the inventory received

d. Calculate Karli’s basis in land received. The land is a capitalasset

e. Calculate Karli’s Outside basis in the partnership interest afterthe distribution

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