Danielle has a basis in her partnership interest of $12,000. She receives a current distribution of $8,000 cash and equipment with a basis of $7,000. There is no potential gain under Sec. 737. What is her basis in the equipment?
A)$0
B)$4,000
C)$7,000
D)none of the above

Question

Quizplus · Accepted Answer

Danielle's basis in the equipment is $4,000. This is calculated by first reducing her basis in the partnership by the cash received ($12,000 - $8,000 = $4,000). Since there is no potential gain under Sec. 737, the remaining basis in her partnership interest is allocated to the equipment.

Danielle Has a Basis in Her Partnership Interest of $12,000