Riley is a 50% partner in the RF Partnership and has an outside basis of $56,000 at the end of the year prior to any distributions. On December 31, Riley receives a proportionate operating distribution of $6,000 cash and a parcel of land with a $14,000 fair value and an $8,000 basis to RF. What is the amount and character of Riley's recognized gain or loss and what is his basis in his partnership interest?

Question

Quizplus · Accepted Answer

Riley's recognized gain is $0 because the distribution does not exceed his outside basis. His new basis in the partnership interest is $42,000, calculated as $56,000 (initial basis) - $6,000 (cash distribution) - $8,000 (basis of land received).

Riley Is a 50% Partner in the RF Partnership and Has