Sabrina has a $12,000 basis in her S&B partnership interest.Sabrina receives a current cash distribution of $10,000 and equipment with a $5,000 basis FMV $6,000).What is Sabrina's recognized gain or loss?

Question

Quizplus · Accepted Answer

Sabrina's recognized gain or loss is $0 because the distribution does not exceed her basis in the partnership. The cash distribution reduces her basis to $2,000 ($12,000 - $10,000), and the equipment received further reduces it to $0, but no gain is recognized as the total distribution ($15,000) does not exceed her basis.

Sabrina Has a $12,000 Basis in Her S&B Partnership Interest