Ruth owns a 25% capital and profits interest in the calendar-year RDV Partnershi

Question

Ruth owns a 25% capital and profits interest in the calendar-year RDV Partnership. Her adjusted basis for her partnership interest on July 1 of the current year is $170,000. On that date, she receives a proportionate nonliquidating distribution of the following assets.

(I) Calculate Ruth's recognized gain or loss on the distribution, if any.
(II) Calculate Ruth's basis in the inventory received.
(III) Calculate Ruth's basis in land received. The land is a capital asset.
(IV) Calculate Ruth's basis for her partnership interest after the distribution.

Partnership's Basis in Asset            Asset's Fair Market Value Cash $90,000                            $90,000 Inventory $110,000 $140,000 Land (held for investment) $100,000 $160,000

Explanation / Answer

(I) Ruth's recognized gain or loss on the distribution = (30000 + 60000)*0.25 = $22500

(II) Ruth's basis in the inventory received = 110000*0.25 = $27500

(III) Ruth's basis in land received = 100000*0.25 = $25000

(IV) Ruth's basis for her partnership interest after the distribution = $170000 + $22500 = $192500

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.