Anthony's basis in the WAM Partnership interest was $200,000 just before he received a proportionate liquidating distribution consisting of investment land (basis of $90,000, fair market value of $100,000), and inventory (basis of $30,000, fair market value of $70,000).After the distribution, Anthony's recognized gain or loss and his basis in the land and inventory are:
A)$80,000 loss; $90,000 (land); $30,000 (inventory).
B)$70,000 loss; $100,000 (land); $30,000 (inventory).
C)$30,000 loss; $100,000 (land); $70,000 (inventory).
D)$0 gain or loss; $170,000 (land); $30,000 (inventory).
E)None of the above.

Question

Quizplus · Accepted Answer

In a liquidating distribution, the partner's basis in the partnership interest is allocated to the distributed assets. Anthony's total basis of $200,000 is allocated to the land ($90,000) and inventory ($30,000), totaling $120,000. The remaining $80,000 basis is added to the land, making it $170,000. No gain or loss is recognized.

Anthony's Basis in the WAM Partnership Interest Was $200,000 Just