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

ID: 2577617 • Letter: T

Question

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 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 basis in the land distributed to the partner?

a. 0

b.   $20,000

c. $15,000

d. $10,000

Explanation / Answer

Ans c. $15000.

Fair market value of land for each partner = $25000

Less : Basis to the partnership = $10000

each partner’s basis in the land

distributed to the partner = $15000