Matt, a partner in the MB Partnership, receives a proportionate, nonliquidating distribution of property having a fair market value of $16,000 and a partnership basis of $23,000. Matt's basis in the partnership is $10,000 before the distribution. In this situation, Matt will recognize no gain or loss. He will take a $10,000 basis in the property, and his basis in the partnership interest is reduced to zero.

Question

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According to the rules of proportionate, nonliquidating distributions, Matt will recognize no gain or loss on receiving the property with a fair market value of $16,000 and a partnership basis of $23,000. His basis in the property will be $10,000, and his basis in the partnership interest will be reduced to zero.

Matt, a Partner in the MB Partnership, Receives a Proportionate