Marty receives a proportionate nonliquidating distribution when the basis of her partnership interest is $50,000.The distribution consists of $60,000 cash and noninventory property (adjusted basis to the partnership of $20,000;fair market value of $23,000).How much gain or loss does Marty recognize,and what is her basis in the distributed property and in her partnership interest following the distribution?
A)$0 gain or loss;$20,000 basis in property;$0 basis in partnership interest.
B)$0 gain or loss;$23,000 basis in property;$2,000 basis in partnership interest.
C)$10,000 capital gain;$0 basis in property;$0 basis in partnership interest.
D)$10,000 capital gain;$20,000 basis in property;$0 basis in partnership interest.
E)$10,000 ordinary income;$0 basis in property;$10,000 basis in partnership interest.

Question

Quizplus · Accepted Answer

Marty recognizes a $10,000 capital gain because the cash distribution ($60,000) exceeds her partnership interest basis ($50,000). Her basis in the distributed property is $0, and her basis in the partnership interest is also $0 after the distribution.

Marty Receives a Proportionate Nonliquidating Distribution When the Basis of Her