Question

Randolph is a 30 percent partner in the RD Partnership. On January 1, RD distributes $15,000 cash, inventory with a fair value of $20,000 (inside basis of $10,000), and a parcel of land with a fair value of $10,000 (inside basis of $5,000) to Randolph in complete liquidation of his interest. RD has no liabilities at the date of the distribution. Randolph's basis in his RD Partnership interest is $37,000. What is Randolph's basis in the distributed inventory and land

Answer 1

$ 10,000 inventory , $ 17,000 land

Step-by-step explanation:

Randolph's bases in the distributed assets are $ 15,000 cash , $ 10,000 inventory and $ 17,000 land.

He first of all allocates his outside basis to the distributed assets in an amount equal to RD'S basis and then went ahead to allocates remaining basis to assets other than cash and hot assets with unrealized appreciation and the remaining basis is allocated to assets other than cash and hot assets.

Inside basis of $10,000

Add parcel of land with a fair value of $10,000

=$20,000

$37,000-$20,000

=$17,000