Tyson is a 25% partner in the KT Partnership. On January 1, KT makes a proportionate distribution of $16,000 cash, inventory with a $10,000 fair value (inside basis $4,000), land A with a fair value of $8,000 (inside basis of $12,000) and land B with a fair value of $6,000 (inside basis of $4,000) to Tyson. KT has no liabilities at the date of thedistribution. Tyson's basis in KT is $23,000. What is Tyson's basis in the distributed inventory, land A and land B?

Question

Quizplus · Accepted Answer

Tyson's basis in the distributed property is equal to the partnership's basis in the property multiplied by Tyson's percentage interest in the partnership. Therefore, Tyson's basis in the distributed inventory is $4,000 (inside basis of $4,000 x 25%), Tyson's basis in land A is $2,000 (inside basis of $12,000 x 25%), and Tyson's basis in land B is $1,000 (inside basis of $4,000 x 25%).

Tyson Is a 25% Partner in the KT Partnership