A partnership may make an optional election to adjust the basis of its property on a distribution to a partner which liquidates the partner's entire interest in the partnership. If such an election is in effect, the partnership:
A) Generally applies the election to transfers that take place at any later date, unless the election is revoked.
B) Only adjusts the basis of its property for differences in basis between that of the partnership and a distributee partner if a transferor-transferee situation arises within two years after the distribution.
C) Increases the basis of similar retained assets when a distributee partner takes a basis which is greater than the partnership's basis in these assets, assuming the partnership does not have any receivables or inventory.
D) Decreases the basis of similar retained assets when a distributee partner takes a basis for the distributed assets which is less than the partnership's basis in these assets.
E) All of the above.

Question

Quizplus · Accepted Answer

The election to adjust the basis of partnership property applies to all subsequent distributions and transfers unless revoked.

A Partnership May Make an Optional Election to Adjust the Basis