Michael was a partner in the M&M Partnership until November 1, when he received a liquidating distribution of investment property with a tax basis of $28,000 and a fair market value of $75,000.Prior to this distribution, his tax basis in his partnership interest was $40,000.What is his tax basis in the property received from the partnership?
A)$75,000
B)$40,000
C)$28,000
D)0

Question

Quizplus · Accepted Answer

In a liquidating distribution, the partner's basis in the property received is equal to the partner's basis in the partnership interest prior to the distribution, reduced by any cash received. Since Michael's basis in the partnership was $40,000 and he received no cash, his basis in the property is $40,000.

Michael Was a Partner in the M&M Partnership Until November