Geneva receives a proportionate nonliquidating distribution from the EFG Partnership.The distribution consists of $10,000 cash and property (adjusted basis to the partnership of $34,000 and fair market value of $42,000).Immediately before the distribution,Geneva's adjusted basis in the partnership interest was $60,000.Her basis in the noncash property received is:
A)$10,000.
B)$34,000.
C)$42,000.
D)$50,000.
E)$60,000.

Question

Quizplus · Accepted Answer

When a partner receives a nonliquidating distribution, the basis in the property received is the same as the partnership's adjusted basis in the property (Sec. 732(b)).
Thus, Geneva's basis in the property received is $34,000. Her basis in the cash portion is $0. Therefore, her total basis in the distribution is $34,000.

Geneva Receives a Proportionate Nonliquidating Distribution from the EFG Partnership