Jessica is a 25% partner in the JRL Partnership. On January 1, JRL distributes $40,000 cash to Jessica. JRL has no hot assets or liabilities at the date of the distribution. Jessica's basis in JRL is $28,000. What is the amount and character of Jessica's gain or loss from the distribution?

Question

Quizplus · Accepted Answer

Jessica's basis in the partnership is $28,000, and she receives a $40,000 cash distribution. The excess of the distribution over her basis ($40,000 - $28,000 = $12,000) is treated as a capital gain.

Jessica Is a 25% Partner in the JRL Partnership