Question

Harvey Harrison has a basis of $30,000 for his partnership interest. He receives as a current...

Harvey Harrison has a basis of $30,000 for his partnership interest. He receives as a current distribution the following as his pro rata share of the partnership assets:

Basis FMV
Cash $5,000 $5,000
Accounts Receivables 0 12,000
Land held for investment 10,000 13,000
Total $15,000 $30,000

(a.) What is Harvey's gain of loss on the distribution?

(b.) What is his basis for the accounts receivable?

(c.) What is his basis for the land?

(d.) What is his basis for his partnership interest?

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Answer #1

Answer.

The Basis of Partnership is the money plus adjusted basis of any property contributed by partner.

A) Zero , as Cash did not exceed Harvey's basis for his partnership interest. He didn't recognize any gain on the distribution.

(b.) Zero. The receivables take the same basis for Harvey as they had for the partnership. No change in basis to recognise gain.

(c.) $10,000. The land also takes the same basis for Harvey as it had for the partnership.Profit on and will be recognise when land will be disposed off.

(d.) $15,000. The basis of his partnership interest is the balance remaining after the reduction for the cash and the basis of the other Property Distributed ($ 30000 - $ 5000 -$ 10000= $15000)

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