Generally,gain is recognized on a proportionate current or liquidating distribution only if the cash distributed exceeds the partner's basis in the partnership interest.For this purpose,relief of a partner's share of a liability is treated as a distribution of cash,and marketable securities distributed may be treated as cash.

Question

Quizplus · Accepted Answer

Either a distribution of cash or relief of debt will trigger gain to the distributee partner if the distribution exceeds the partner's basis in interest.If other property is distributed,and the partnership's inside basis in the assets exceeds the partner's outside basis,the partner generally takes a substituted basis in the property.

Generally,gain Is Recognized on a Proportionate Current or Liquidating Distribution