Question

Curry's adjusted basis in Vantage Partnership was $5,000 at the time he received a non liquidating distribution of land. The land had an adjusted basis of $6,000 and a fair market value of $9,000 to Vantage. What was the amount of Curry's basis in the land?

1) $9,000
2) $6,000
3) $5,000
4) $1,000

Answer 1

Curry's basis in the land received from a nonliquidating partnership distribution is $5,000, which is limited by his basis in the partnership.

Step-by-step explanation:

The question relates to a taxpayer's adjusted basis in property received during a partnership distribution, which is a common issue in taxation relevant to business and accounting studies. When a partner receives a nonliquidating distribution from a partnership, the partner's basis in the distributed property is the same as the partnership's adjusted basis in the property immediately before the distribution (provided that the basis does not exceed the partner's basis in the partnership).

In this scenario, Curry's adjusted basis in the partnership is $5,000, while the land has an adjusted basis of $6,000 and a fair market value of $9,000 to the partnership. As Curry's adjusted basis in the partnership ($5,000) is less than the land's adjusted basis ($6,000), Curry's basis in the land would be limited to his adjusted basis in the partnership. Therefore, the correct answer is option 3): $5,000.