Danielle has a basis in her partnership interest of $12,000. She receives a current distribution of $8,000 cash and equipment with a basis of $7,000. There is no potential gain under Sec. 737. What is her basis in the equipment?

Question

Quizplus · Accepted Answer

Danielle's basis in the partnership interest is reduced by the cash distribution first, leaving her with $4,000 ($12,000 - $8,000). This remaining basis is then assigned to the equipment, making her basis in the equipment $4,000.

Danielle Has a Basis in Her Partnership Interest of $12,000