Kathy purchases a one-third interest in the KDP Partnership from Paul for $60,000. Just prior to the sale, Paul's outside and inside bases in KDP are $48,000. KDP's balance sheet includes the following:

If KDP has a §754 election in place, what is Kathy's special basis adjustment?

Question

Kathy purchases a one-third interest in the KDP Partnership from Paul for $60,000. Just prior to the sale, Paul's outside and inside bases in KDP are $48,000. KDP's balance sheet includes the following:

If KDP has a §754 election in place, what is Kathy's special basis adjustment?

Quizplus · Accepted Answer

Kathy's special basis adjustment is $12,000, the difference between her outside basis ($60,000) and inside basis ($48,000).

Kathy Purchases a One-Third Interest in the KDP Partnership from Paul