Gil's outside basis in his interest in the GO Partnership is $100,000. In a proportionate current distribution, the partnership distributes to him cash of $30,000, inventory (fair market value of $40,000, basis to the partnership of $20,000), and land (fair market value of $90,000, basis to the partnership of $40,000). The partnership continues in existence.

Does the partnership recognize any gain or loss as a result of this distribution? Explain.

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17 August, 19:22

Gil's outside basis in his interest in the GO Partnership is $100,000. In a proportionate current distribution, the partnership distributes to him cash of $30,000, inventory (fair market value of $40,000, basis to the partnership of $20,000), and land (fair market value of $90,000, basis to the partnership of $40,000). The partnership continues in existence.

Does the partnership recognize any gain or loss as a result of this distribution? Explain.

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Kolby Sheppard · Answer 1

No, the partnership does not recognize any gain or loss as a result of this distribution.

Explanation:

In proportionate non-liquidating distribution, a partnership does not recognize any gain or loss because the gain or loss that is incurred, due to distribution to partners is reported in partner's tax returns, that is, they are included in partner's income only. So, the partnership does not recognize any gain or loss as a result of this distribution.