Gary is a one-third partner in GNG Partners. a general partnership. Gary’s adjus

Question

Gary is a one-third partner in GNG Partners. a general partnership. Gary’s adjusted basis in his partnership interest is $25,000. Gary received a distribution of real estate in a non-liquidating distribution from the partnership. The real estate had an adjusted basis to the partnership of $20,000 and a fair market value of $50,000 on the date of distribution. What is Gary’s basis in the real property received in the non-liquidating distribution?

a.             0

b.            $20,000

c.             $25,000

d.            $50,000

Explanation / Answer

The partner's basis in property received in the non-liquidating distribution is the basis of the property distributed but limited to the basis of partner.

Here, the property distributed in the non-liquidating distribution is real property.

Basis of Partner i.e., Gary is $25000

Basis of real property is $20000

Therefore the Gary's basis in the real property received in the non-liquidating distribution is $20000

Correct Option is b) $20000.

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