Megan's basis was $100,000 in the MAR Partnership interest just before she received a proportionate nonliquidating distribution consisting of land held for investment (basis of $80,000, fair market value of $100,000) and inventory (basis of $60,000, fair market value of $60,000). After the distribution, Megan's bases in the land and inventory are, respectively:
A) $80,000 and $20,000.
B) $100,000 and $0.
C) $40,000 and $60,000.
D) $50,000 and $50,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Megan's basis in the partnership interest was $100,000, and she received a proportionate nonliquidating distribution of land and inventory. The basis in the land is the same as the partnership's basis ($80,000), and the basis in the inventory is also the same as the partnership's basis ($60,000). Therefore, Megan's new basis in the land is $80,000, and her new basis in the inventory is $60,000. Hence, the correct option is C).

Megan's Basis Was $100,000 in the MAR Partnership Interest Just