Randolph is a 30% partner in the RD Partnership. On January 1, RD distributes $15,000 cash, an investment with a fair value of $20,000 (inside basis of $10,000), and a parcel of land with a fair value of $10,000 (inside basis of $5,000) to Randolph in completeliquidation of his interest. RD has no liabilities at the date of the distribution. Randolph's basis in RD is $48,000. What is Randolph's basis in the distributed investment and land?

Question

Quizplus · Accepted Answer

Randolph's total basis in the partnership is $48,000. After receiving $15,000 in cash, his remaining basis is $33,000. The basis in the distributed assets is limited to the partnership's inside basis, which is $10,000 for the investment and $5,000 for the land. The remaining basis of $33,000 is allocated to the investment and land proportionally to their fair market values, resulting in $22,000 for the investment and $11,000 for the land.

Randolph Is a 30% Partner in the RD Partnership