Atiqa receives a nonliquidating distribution of land from her partnership.The partnership purchased the land five years ago for $20,000.At the time of the distribution,it is worth $28,000.Prior to the distribution,Atiqa's basis in her partnership interest is $37,000.Atiqa's basis in the distributed land and her post-distribution basis in her partnership interest are
A) $$\begin{array} {| l | l | }
\hline \text { Land } & \text { Partnership Interest } \
\hline \$ 28,000 & \$ 9,000\\hline
\end{array}$$
B) $$\begin{array} {| l | l | }
\hline \text { Land } & \text { Partnership Interest } \
\hline \$ 28,000 & \$ 17,000\\hline
\end{array}$$
C) $$\begin{array} { | l | l | }
\hline \text { Land } & \text { Partnership Interest } \
\hline \$ 20,000 & \$ 9,000 \
\hline
\end{array}$$
D) $$\begin{array} { | l | l | }
\hline \text { Land } & \text { Partnership Interest } \
\hline \$ 20,000 & \$ 17,000 \
\hline
\end{array}$$

Question

Atiqa receives a nonliquidating distribution of land from her partnership.The partnership purchased the land five years ago for $20,000.At the time of the distribution,it is worth $28,000.Prior to the distribution,Atiqa's basis in her partnership interest is $37,000.Atiqa's basis in the distributed land and her post-distribution basis in her partnership interest are
A) $$\begin{array} {| l | l | } 
\hline \text { Land } & \text { Partnership Interest } \
\hline \$ 28,000 & \$ 9,000\\hline
\end{array}$$
B) $$\begin{array} {| l | l | } 
\hline \text { Land } & \text { Partnership Interest } \
\hline \$ 28,000 & \$ 17,000\\hline
\end{array}$$
C) $$\begin{array} { | l | l | } 
\hline \text { Land } & \text { Partnership Interest } \
\hline \$ 20,000 & \$ 9,000 \
\hline
\end{array}$$
D) $$\begin{array} { | l | l | } 
\hline \text { Land } & \text { Partnership Interest } \
\hline \$ 20,000 & \$ 17,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

In a nonliquidating distribution, the basis of the distributed property is the lesser of the partnership's basis in the property ($20,000) or the partner's basis in the partnership interest ($37,000). Therefore, Atiqa's basis in the land is $20,000. Her post-distribution basis in her partnership interest is her original basis ($37,000) minus the basis of the distributed land ($20,000), which equals $17,000.

Atiqa Receives a Nonliquidating Distribution of Land from Her Partnership Land Partnership Interest $28,000$9,000\begin{array} {| l | l | } \hline \text { Land } & \text { Partnership Interest } \\\hline \$ 28,000 & \$ 9,000\\\hline\end{array} Land $28,000​ Partnership Interest $9,000​​

Atiqa Receives a Nonliquidating Distribution of Land from Her Partnership $\begin{array} {| l | l | } \hline \text { Land } & \text { Partnership Interest } \\\hline \$ 28,000 & \$ 9,000\\\hline\end{array}$