The MBA Partnership makes a § 736b) cash payment of $20,000 to partner Amanda in liquidation of her interest in the partnership. The partnership owns no hot assets. Amanda's basis in her partnership interest before the distribution was $50,000. If the partnership has a § 754 election in effect, it will record a $30,000 decrease in its inside basis in partnership assets, affecting all the remaining partners in the partnership.

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The partnership has a § 754 election in effect, which means that the partnership will adjust its inside basis in partnership assets to reflect the distribution to Amanda. The partnership's inside basis in partnership assets will be decreased by $30,000, which will affect all the remaining partners in the partnership.

The MBA Partnership Makes a § 736b) Cash Payment of $20,000