On June 1, Jefferson had a basis in his partnership interest of $75,000. On June 2, he received a cash distribution from the partnership of $28,000. All of the cash distribution is taxable.

Question

Quizplus · Accepted Answer

The cash distribution from the partnership to Jefferson would generally not be taxable up to the extent of his basis in the partnership interest. Since his basis was $75,000 and the distribution was $28,000, it would not exceed his basis and therefore, typically would not be taxable.

On June 1, Jefferson Had a Basis in His Partnership