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7 June, 22:49

Walter receives cash of $18,000 and land with a fair market value of $75,000 (adjusted basis of $50,000) in a current distribution. His basis in his partnership interest is $16,000 before the distribution. If an amount is zero, enter "0". a. What amount of gain must Walter recognize as a result of the current distribution?

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  1. 8 June, 00:17
    Walter's recognized gain is $2,000


    Walter's gain/loss = cash distribution - basis in the partnership = $18,000 - $16,000 = $2,000

    A partner (Walter) does not have to recognize income on a non-liquidating partnership distribution of property other than money. This land distribution must be treated as a sale and recorded at fair market value.
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