Riley is a 50percent partner in the RF Partnership and has an outside basis of $56,000 at the end of the year prior to any distributions. On December 31, Riley receives a proportionate operating distribution of $6,000 cash and a parcel of land with a $14,000 fair value and an $8,000 basis to RF. What is Riley's basis in the distributed property?
A)Cash $6,000, land $0.
B)Cash $6,000, land $8,000.
C)Cash $6,000, land $14,000.
D)Cash $6,000, land $22,000.

Question

Quizplus · Accepted Answer

Riley's basis in the distributed property (land) is its basis to the partnership (RF), which is $8,000. The cash distribution does not affect the basis of the land. The basis of the distributed property to the partner is the same as its basis to the partnership, not its fair market value.

Riley Is a 50percent Partner in the RF Partnership and Has