Natalie, a partner in a real estate partnership, receives a nonliquidating distribution consisting of $25,000 cash and property (a Section 1231 asset) valued at $60,000 in July.The partnership's tax basis in the property is $18,000 and Natalie's tax basis in her partnership interest is $21,000.What is Natalie's recognized gain on the distribution and her tax basis in the property received?

Question

Quizplus · Accepted Answer

Natalie recognizes a gain of $4,000 because the cash received ($25,000) exceeds her basis in the partnership interest ($21,000). Her basis in the property is zero because her entire basis is used up by the cash distribution.

Natalie, a Partner in a Real Estate Partnership, Receives a Nonliquidating