Question

Karen has an $80,825 basis in her 50 percent partnership interest in the KD Partnership before receiving a current distribution of $7,575 cash and land with a fair market value of $40,850 and a basis to the partnership of $21,150.

a. What is the amount and character of Karen's recognized gain or loss?

b. What is Karen's basis in the land?

c. What is Karen's remaining basis in her partnership interest?

Answer 1

Answer: a) $0

b) $21,150

c)$52,100

Step-by-step explanation:

a) Karen would recognize no gain or losses in this scenario.

b) Karen would carryover the basis on the land which is $21,150

c) To calculate her remaining basis, we subtract the cash payment as well as the basis for the land she was distributed.

Calculating would be,

= 80,825 - 7,575 - 21,150

= $52,100

$52,100 is Karen's remaining basis in her partnership interest.