29. The ABCD partnership has four partners. Each partner’s adjusted basis in the

Question

29.        The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned by that partner was $100,000 on the first day of last year. The partnership reported net income for last year of $80,000 (there were no separately stated items to take into account). The partnership distributed pro rata to each partner $30,000 in cash plus identical parcels of land that each had a fair market value of $25,000 and a basis to the partnership of $10,000. How much is includible in each partner’s gross income for the year as the result of the distribution?

a. $80,000

b.   $55,000

c.   $30,000

d. $10,000

e.        0

Explanation / Answer

In the current situation we can see that the net income reported bby the partnership was 80,000. And 30000 was distributed in cash to each partner as well as there was a distribution of property to the tune of 25000 to each partner. Hence, share of income as well as fair market value of property distributed is added in Partner's gross income.

hence the correct option is option B

Basis to partnership is not an includible item in Gross income.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.