Question

Hs $30000 partnership interest is terminated through a capatial asset distribution having a fair market value of $50000 ( partnership basis of $40000) cash of $10000. Assuming that an optional basis adjustment election is in effect which of the following statement is true?

A Hs basis in the capital asset is $20000

B H does not recognize gain or loss and takes a $30000 basis

C Hreconized a gain of $30000

D The partnership increases the basis of its remaining assets vy $ 30000

Answer 1

A ) TRUE

A ) Hs basis in the capital asset in 20000 - ( TRUE )

partnership interest = 30000

less; cash received = 10000

basis available land = 20000

B ) H does not recognize gain or loss and takes a 30000 basis - ( FALSE )

capital asset distrubuted = 40000

less; basis after cash = 20000

gain = 20000

C ) H reconized a gain of 30000 - ( FALSE )

capital asset distrubuted = 40000

less ; basis after cash = 20000

gain = 20000

D ) the partnership increase the basis of its remaining assets vy 30000 - ( FALSE )

capital asset distrubuted = 40000

less; H s basis after cash = 20000

   20000