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ustin and Lauren are equal partners in the PJenn Partnership. The partners formed the partnership seven...

ustin and Lauren are equal partners in the PJenn Partnership. The partners formed the partnership seven years ago by contributing cash. Prior to any distributions, the partners have the following bases in their partnership interests: (Leave no answer blank. Enter zero if appplicable.)

Partner Outside Basis
Justin $ 24,625
Lauren $ 24,625


On December 31 of the current year, the partnership makes a pro rata operating distribution of:

Partner Distribution
Justin Cash $ 28,375
Lauren Cash $ 20,250
Property $ 8,125 (FMV) ($2,825 basis to partnership)

b. What is Justin’s remaining basis in his partnership interest?

d. What is Lauren’s basis in the distributed assets?

Basis in cash
Basis in property

e. What is Lauren’s remaining basis in her partnership interest?

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Homework Answers

Answer #1
b
Answer is 0
d
Lauren's basis
Basis in cash 20,250
Basis in Property 2,825
e
As with the cash distribution, if the FMV of the property exceeds the partner's outside basis in the partnership, then the partner's interest in the partnership is reduced to 0
CASH DISTRIBUTION 20,250
FMV 8,125
28,375
OUTSIDE BASIS 24,625
Since Cash distribution+FMV is gretter than Outside basis therefore remaining basis is 0

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