Barry has a basis in his partnership interest of $50,000 when the partnership distributes $60,000 to Barry.As a result of the distribution,Barry reduces his basis in the partnership interest to $0,has a $60,000 basis in the cash received,and he recognizes a gain of $10,000 on the distribution.

Question

Quizplus · Accepted Answer

In a partnership distribution, if the distribution exceeds the partner's basis, the partner's basis is reduced to zero, and the excess is recognized as a gain. Barry's basis is $50,000, and he receives $60,000, so he recognizes a $10,000 gain.

Barry Has a Basis in His Partnership Interest of $50,000