Several years ago, the Jaymo Partnership purchased 2,000 shares of ABCO stock (publicly traded) for $40,000; the stock now has a fair market value of $90,000. If this stock is distributed to Jason in liquidation of his 30% partnership interest, it is treated as a cash distribution of $75,000 and a property distribution of $15,000.

Question

Quizplus · Accepted Answer

The fair market value of the stock is $90,000, and Jason's 30% partnership interest is equal to $75,000 ($225,000 x 30%). Therefore, $75,000 of the stock will be treated as a cash distribution and $15,000 will be treated as a property distribution.

Several Years Ago, the Jaymo Partnership Purchased 2,000 Shares of ABCO