Several years ago, the Jaymo Partnership purchased 2,000 shares of ABCO stock (publicly traded) for $40,000; the stock now has a fair market value of $90,000. If this stock is distributed to Jason in liquidation of his 30% partnership interest, it is treated as a cash distribution of $75,000 and a property distribution of $15,000. Assume Jaymo owns no other securities.

Question

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The fair market value of the ABCO stock is $90,000 and Jason's 30% share in the partnership is worth $75,000, which is treated as a cash distribution. The remaining $15,000 is treated as a property distribution, which is the value of the ABCO stock that is being distributed to Jason.

Several Years Ago, the Jaymo Partnership Purchased 2,000 Shares of ABCO