Daniela is a 25% partner in the JRD Partnership. On January 1, JRD distributes $16,000 cash, inventory with a $16,000 fair value (inside basis $8,000), and accounts receivable with a fair value of $8,000 (inside basis of $12,000) to Daniela. JRD has no liabilities at the date of the distribution. Daniela's basis in JRD is $20,000. What is Daniela's basis in the distributed inventory and accounts receivable?

Question

Quizplus · Accepted Answer

Daniela's basis in the partnership is reduced by the cash distribution first, leaving $4,000 ($20,000 - $16,000). This remaining basis is allocated to the inventory and accounts receivable based on their inside basis, resulting in $2,000 for each.

Daniela Is a 25% Partner in the JRD Partnership