Bonbon receives a current distribution consisting of $5,000 cash plus other property with an adjusted basis to the partnership of $6,000 and a fair market value on the date of the distribution of $12,000.Bonbon has a 10 percent interest in the partnership and her basis in her partnership interest immediately prior to the distribution is $15,000.What is Bonbon's basis in the non-cash property received in the current distribution?

Question

Quizplus · Accepted Answer

Bonbon's basis in the non-cash property is the lesser of the partnership's adjusted basis in the property ($6,000) or her remaining basis in the partnership interest after the cash distribution ($15,000 - $5,000 = $10,000). Thus, her basis in the non-cash property is $6,000.

Bonbon Receives a Current Distribution Consisting of $5,000 Cash Plus