Catherine is a 30percent partner in the ACW Partnership, with an outside basis of $20,000. ACW distributes land with a basis of $12,000 and fair value of $18,000 to Catherine in complete liquidation of her interest. Catherine recognizes a capital loss of $2,000 on the distribution.

Question

Quizplus · Accepted Answer

Catherine's outside basis of $20,000 exceeds her share of ACW's basis in the land of $12,000, so she would not recognize a capital loss on the distribution. Her basis in the land would be $12,000, equal to ACW's basis in the property.

Catherine Is a 30percent Partner in the ACW Partnership, with an Outside