When a partnership distributes property that has a fair market value greater than its basis, the partnership must recognize the income as if it sold the property.

Question

Quizplus · Accepted Answer

In general, partnerships do not recognize gain or loss when distributing property to partners, even if the fair market value exceeds the basis. The gain or loss is typically recognized by the partner receiving the property when they eventually sell it.

When a Partnership Distributes Property That Has a Fair Market