Patricia Flood holds a 25 interest in the Markham Partnership. The Partnership holds securities with an adjusted cost base of $250,000 and a fair market value of $475,000. During the taxation year ending December 31, 2020, the Partnership has decided to distribute these securities to the partners in proportion to their interests. Patricia receives 25 percent of these securities and, at the time that they are received, the adjusted cost base of her partnership interest is $180,000. What are the tax consequences to Patricia and Markham with respect to this distribution? Your answer should include the adjusted cost base of Patricia's partnership interest on both December 31, 2020 and January 1, 2021.

Question

Quizplus · Accepted Answer

The Answer of Patricia Flood holds a 25 interest in the Markham Partnership. The Partnership holds securities with an adjusted cost base of $250,000 and a fair market value of $475,000. During the taxation year ending December 31, 2020, the Partnership has decided to distribute these securities to the partners in proportion to their interests. Patricia receives 25 percent of these securities and, at the time that they are received, the adjusted cost base of her partnership interest is $180,000. What are the tax consequences to Patricia and Markham with respect to this distribution? Your answer should include the adjusted cost base of Patricia's partnership interest on both December 31, 2020 and January 1, 2021.

Patricia Flood Holds a 25 Interest in the Markham Partnership