In 2015,Angel contributes land to a partnership with a basis of $12,000 and a FMV of $22,000.In 2016,when the FMV of the land is $28,000,the partnership distributes the land to Shelia,another partner.What is the gain or loss recognized by Angel on the distribution to Shelia?

Question

Quizplus · Accepted Answer

Angel's basis in the land was $12,000, and the FMV at the time of distribution was $28,000. Therefore, there is a $16,000 gain ($28,000 - $12,000). However, this gain is not recognized until Angel sells or disposes of her partnership interest. Since the land was distributed to Shelia as part of a partnership distribution and not sold, there is no recognition of gain or loss by Angel at the time of distribution. Therefore, the answer is B ($0).

In 2015,Angel Contributes Land to a Partnership with a Basis