4. | Question : | (TCO 7) Martin is a partner in a continuing partnership. At the end of the current year, the partnership distributed to Martin in a proportionate, nonliquidating distribution cash of $20,000, inventory with a basis to the partnership of $6,000 and a fair market value of $12,000, and a parcel of land with a basis to the partnership of $20,000 and a fair market value of $15,000. Martin’s basis in the partnership interest was $100,000 before the distribution. Which basis does Martin take in the inventory and land, and which is his basis in the partnership interest following the distribution? |
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| Student Answer: | | $6,000 basis in inventory, $15,000 basis in land, $59,000 basis in partnership | | | | $6,000 basis in inventory, $20,000 basis in land, $54,000 basis in partnership | | | | $12,000 basis in inventory, $15,000 basis in land, $53,000 basis in partnership | | | | $12,000 basis in inventory, $20,000 basis in land, $48,000 basis in partnership | | | | $12,000 basis in inventory, $68,000 basis in land, $0 basis in partnership *Martin’s basis in the inventory and land equals the partnership’s basis in these properties. Whether the property is appreciated or depreciated does not matter. | | | | |
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