Question

Marvel has an adjusted basis in a partnership interest of $25,000 before receiving a current distribution of $4,000 cash, inventory with an adjusted basis of $6,000 and a fair market value of $9,000, and land with a fair market value of $7,000 and an adjusted basis of $8,000. section 754 does not apply. what is marvel's basis in the partnership interest after the distribution?

Answer 1

$7,000

Step-by-step explanation:

Marvel's basis after the distribution = $25,000 (original basis) - $4,000 (cash) - $6,000 (inventory basis) - $8,000 (land basis) = $7,000

To determine Marvel's basis, we must use the cost basis of the inventory, not the fair market value, as well as the basis of the land that he received.

Answer 2

Answer: $7,000

Step-by-step explanation:

Using the cost basis and adjusted basis of inventory and land respectively, Marvel's basis in the partnership interest after distribution is given by;

Marvel's beginning basis = $25,000

Cash = ($4,000)

Inventory = ($6,000)

Land = ($8000)

Marvel's Beginning basis - (cash + inventory + land)

$25,000 - ($4000+$6,000+$8,000)

$25,000 - $17,000

Marvel's basis in the partnership interest after the distribution is $7,000