Question

# The BAM Partnership distributed the following assets to partner Barbie in a proportionate nonliquidating distribution: \$10,000...

The BAM Partnership distributed the following assets to partner Barbie in a proportionate nonliquidating distribution: \$10,000 cash, land parcel A (basis of \$5,000, fair market value of \$30,000) and land parcel B (basis of \$10,000, fair market value of \$30,000). Barbie's basis in her partnership interest was \$40,000 immediately before the distribution. Barbie will allocate a basis of \$10,000 and \$20,000, respectively, to the two land parcels, and her basis in her partnership interest will be reduced to \$0.

True False

#### Homework Answers

Answer #1

True

Explanation : Barbie's basis in partnership interest immediately before distribution was 40,000.

The following assets distributed to Barbie as a non liquidation distribution :

Cash = \$ 10,000

Basis of land parcel A = \$ 10,000

Basis of land parcel B = \$ 20,000

Total basis of assets distributed to Barbie = \$ 10,000 + \$ 10,000 + \$ 20,000 = \$ 40,000

After distribution, Barbie's remaining basis = Basis of partnership interest of Barbie before distribution - Basis of Distributed assets to Barbie = \$ 40,000 - \$ 40,000 = \$ 0

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