Logan's basis in his partnership interest is $20,000 when he receives a pro rata nonliquidating distribution from the partnership of $22,000 cash and inventory with a basis of $2,000 and fair market value of $3,000.What is Logan's recognized gain on this distribution?
A)0
B)$2,000
C)$3,000
D)$4,000

Question

Quizplus · Accepted Answer

Logan's recognized gain is $2,000 because the cash distribution exceeds his basis by $2,000 ($22,000 cash - $20,000 basis). The inventory does not trigger a gain as it is not considered in the gain calculation for nonliquidating distributions.

Logan's Basis in His Partnership Interest Is $20,000 When He