27. The ABCD partnership has four partners. Each partner’s adjusted basis in the

Question

27.        The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned by that partner was $100,000 on the first day of last year. The partnership reported net income for last year of $80,000 (there were no separately stated items to take into account). The partnership distributed pro rata to each partner identical parcels of land that each had a fair market value of $25,000 and a basis to the partnership of $10,000. What is each partner’s adjusted basis in the land distributed to the partner?

a. 0

b.   $20,000

c. $15,000

d. $10,000

Explanation / Answer

B)Fair market value of plot of land is $25000 but it is distributed in partnership at the basis of $10000.So each partner's adjusted basis in the land will be calculated the manner in which it is distributed.Hence $10000.

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