Mark receives a proportionate nonliquidating distribution.At the beginning of the partnership year,the basis of his partnership interest is $100,000.During the year,he received a cash distribution of $40,000 and a property distribution (basis of $30,000,fair market value of $25,000).In addition,Mark's share of partnership liabilities was reduced by $10,000 during the year.How much gain or loss does Mark recognize;what is his basis in the property he received;and what is his remaining basis in the partnership interest?
A)$25,000 loss;$25,000 basis in property;$0 remaining basis.
B)$30,000 loss;$30,000 basis in property;$0 remaining basis.
C)$0 gain or loss;$25,000 basis in property;$25,000 remaining basis.
D)$0 gain or loss;$30,000 basis in property;$20,000 remaining basis.
E)$0 gain or loss;$20,000 basis in property;$30,000 remaining basis.

Question

Quizplus · Accepted Answer

Mark recognizes no gain or loss because the distribution is nonliquidating and does not exceed his basis. His basis in the property is its basis to the partnership ($30,000). After the cash distribution ($40,000) and the reduction in liabilities ($10,000), his remaining basis is $20,000 ($100,000 - $40,000 - $10,000 - $30,000).

Mark Receives a Proportionate Nonliquidating Distribution