Kristen and Harrison are equal partners in the KH Partnership. The partners formed the partnership 5 years ago by contributing cash. Prior to any distributions Harrison has a basis in his partnership interest of $44,000. On December 31, KH makes a proportionate operating distribution of $50,000 cash to Harrison. What is the amount and character of Harrison's recognized gain or loss and what is his remaining basis in KH?

Question

Quizplus · Accepted Answer

Harrison receives a cash distribution of $50,000, which exceeds his basis of $44,000. The excess of $6,000 is recognized as a capital gain, and his remaining basis in the partnership is reduced to $0.

Kristen and Harrison Are Equal Partners in the KH Partnership