Zach's partnership interest basis is $100,000. Zach receives a proportionate, liquidating distribution from a liquidating partnership of $50,000 cash and inventory having a basis of $20,000 to the partnership and a fair market value of
$30,000. Zach assigns a basis of $20,000 to the inventory and recognizes a $30,000 loss.

Question

Quizplus · Accepted Answer

Zach's basis in the inventory is $20,000, which is the same as the partnership's basis. Zach recognizes a $10,000 loss on the inventory, which is the difference between the fair market value of the inventory ($30,000) and his basis in the inventory ($20,000).

Zach's Partnership Interest Basis Is $100,000