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

Question

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Tyson's basis in the partnership is $20,000. After receiving $16,000 in cash, his remaining basis is $4,000. The land is distributed at its inside basis of $8,000, but Tyson can only take a basis in the land up to his remaining partnership basis, which is $4,000.

Tyson Is a 25% Partner in the KT Partnership