Bryan has $150,000 basis in his partnership interest. The partnership distribute

Question

Bryan has $150,000 basis in his partnership interest. The partnership distributes to him cash basis of $35,000, cash basis receivables with a basis of $0 and a FMV of $30,000 and three parcels of land: (Parcel 1 Basis $95,000 – FMV $60,000) - (Parcel 2 Basis $60,000----FMV $45,000) - (Parcel 3 Basis $40,000----FMV 35,000).

       a. What is Bryan’s realized gain and how much is recognized?

       b. What is the land’s substituted basis?

       c. What is Bryan adjusted basis for each parcel of Land?

Explanation / Answer

1. Recognized gain statement =

Basis of partnership = 1,50,000$

Cash received. = 35000$

Reduced basis of partnership = 115000$

Less: receivables FMV. =. 30,000

Adjusted basis of partnership =. 85000$

Less: FMV of Land parcel 1 = 60,000$

Less: FMV of Land parcel 2. = 45000$

Less: FMV of land Parcel 3. = 35000$

Realized gain. = 55000$

2. Land's substituted basis is the FMV of Land and to be treated as sale of land = 60,000+45000+35000= 1,40,000$

3. Bryan's basis in land = 60,000 45000 and 35000 as their FMVs

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