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

Question

30.     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. What is each partner’s adjusted basis in the land distributed to the partner?

a. 0

b.   $20,000

c. $15,000

d. $10,000

Explanation / Answer

The correct answer is option (C) $15,000.

After each partner deducts $10,000 as basis for the partnership from the $25,000 fair market value.

$25,000 - $10,000 = $15,000

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