Daniela is a 25% partner in the JRD Partnership.On January 1,JRD makes a proportionate distribution of $16,000 cash,inventory with a $16,000 fair value (inside basis $8,000),and accounts receivable with a fair value of $8,000 (inside basis of $12,000)to Daniela.JRD has no liabilities at the date of the distribution.Daniela's basis in JRD is $20,000.What is Daniela's basis in the distributed inventory and accounts receivable?

Question

Quizplus · Accepted Answer

Daniela's basis in the partnership is reduced by the cash distribution first, leaving $4,000 ($20,000 - $16,000). The remaining basis is allocated to the inventory and accounts receivable based on their inside basis. Since the inventory's inside basis is $8,000 and the accounts receivable's inside basis is $12,000, the remaining $4,000 basis is allocated proportionately, resulting in $2,000 for inventory and $2,000 for accounts receivable.

Daniela Is a 25% Partner in the JRD Partnership