Ellen is a 25 percent partner in EFGH Partners, a general partnership. Ellen’s a

Question

Ellen is a 25 percent partner in EFGH Partners, a general partnership. Ellen’s adjusted basis in her partnership interest is $18,000. During the current taxable year, Ellen received a non-liquidating distribution of land from EFGH Partners that had an adjusted basis to the partnership of $23,000 and a fair market value of $45,000 on the date of distribution. What is Ellen’s basis in the land received in the non-liquidating distribution?

a.             0

b.            $18,000

c.             $23,000

d.            $45,000

Explanation / Answer

The correct answer is option b. $18,000

This is because she would be entitled to a share in land upto a maximum of adjusted basis in her partnership

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