Barbara receives a current distribution consisting of $2,000 cash plus other property with an adjusted basis to the partnership of $2,300 and a fair market value on the date of the distribution of $7,000. Barbara has a 10 percent interest in the partnership and her basis in her partnership interest, immediately prior to the distribution, is $5,000. What is Barbara's basis in the noncash property received in the current distribution?

Question

Quizplus · Accepted Answer

Barbara's basis in the noncash property received is the lesser of the partnership's adjusted basis in the property ($2,300) or her remaining basis in the partnership interest after the cash distribution ($5,000 - $2,000 = $3,000). Therefore, her basis in the noncash property is $2,300.

Barbara Receives a Current Distribution Consisting of $2,000 Cash Plus