Randolph is a 30% partner in the RD Partnership.On January 1,RD distributes $15,000 cash,an investment with a fair value of $20,000 (inside basis of $10,000),and a parcel of land with a fair value of $10,000 (inside basis of $5,000)to Randolph in complete liquidation of his interest.RD has no liabilities at the date of the distribution.Randolph's basis in RD is $48,000.What is Randolph's basis in the distributed investment and land?

Question

Quizplus · Accepted Answer

Randolph's total basis in the partnership is $48,000. After receiving $15,000 in cash, his remaining basis is $33,000. The total inside basis of the distributed assets is $15,000 ($10,000 for the investment and $5,000 for the land). Randolph's remaining basis of $33,000 is allocated to the investment and land in proportion to their inside bases, resulting in $22,000 for the investment and $11,000 for the land.

Randolph Is a 30% Partner in the RD Partnership