Connie owns a one-third capital and profits interest in the calendar-year CDB Pa

Question

Connie owns a one-third capital and profits interest in the calendar-year CDB Partnership. Her adjusted basis for her partnership interest was $120,000 when she received a proportionate nonliquidating distribution of the following assets:

a. Calculate Connie's recognized gain or loss on the distribution, if any.

b. Calculate Connie's basis in the land received.

c. Calculate Connie's basis for her partnership interest after the distribution.

Partnership's Basis in Asset Asset's Fair Market Value Cash $140,000 $140,000 Land held for investment $30,000 $60,000

Explanation / Answer

a) Recognized Gain for Connie is excess of cash distribution over her basis. $140000-120000= $20000

b) Connie basis in the land received is $0. Because after the cash distribution her basis is 0. So according to rule lesser of her basis i.e $0 or the carryover basis of land $30000 is taken.

c) Connie has $0 or say no remaining basis after the distribution. as the cash basis already exceeded $20000 of her basis. so no basis amount left for her.

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