Anthony's basis in the WAM Partnership interest was $200,000 just before he received a proportionate liquidating
Distribution consisting of investment land (basis of $90,000, fair market value of $100,000), and inventory (basis of
$30,000, fair market value of $70,000). After the distribution, Anthony's recognized gain or loss and his basis in the land and inventory are:

Question

Quizplus · Accepted Answer

The recognized gain or loss is calculated as the difference between the fair market value of the distributed property and the partner's basis in the partnership interest. In this case, the recognized gain is $100,000 - $200,000 = -$100,000. The basis in the distributed property is equal to the partner's basis in the partnership interest immediately before the distribution, reduced by the recognized gain or increased by the recognized loss. In this case, the basis in the land is $200,000 - $100,000 = $100,000, and the basis in the inventory is $200,000 - $100,000 = $100,000.

Anthony's Basis in the WAM Partnership Interest Was $200,000 Just