Tyson is a 25% partner in the KT Partnership. On January 1, KT makes a proportionate distribution of $16,000 cash and land with a $16,000 fair value (inside basis $8,000) to Tyson. KT has no liabilities at the date of the distribution. Tyson's basis in KT is$20,000. What is Tyson's basis in the distributed land?

Question

Quizplus · Accepted Answer

Tyson's basis in the partnership is reduced by the cash distribution first, leaving $4,000 ($20,000 - $16,000). This remaining basis is then allocated to the land, so Tyson's basis in the distributed land is $4,000.

Tyson Is a 25% Partner in the KT Partnership