Carl receives a proportionate nonliquidating distribution when the basis of his partnership interest is $60,000.The distribution consists of $20,000 in cash and property with an adjusted basis to the partnership of $35,000 and a fair market value of $40,000.Carl's basis in the noncash property and his remaining basis in the partnership interest are:
A)$60,000;$0.
B)$35,000;$0.
C)$35,000;$5,000.
D)$40,000;$5,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Carl's basis in the noncash property is $35,000, which is the adjusted basis to the partnership. After the cash distribution of $20,000, his remaining basis in the partnership interest is $5,000 ($60,000 initial basis - $20,000 cash - $35,000 noncash property basis).

Carl Receives a Proportionate Nonliquidating Distribution When the Basis of His