Question

Jenny has a $55,600 basis in her 50 percent partnership interest in the JM Partnership before receiving any distributions. This year JM makes a proportionate operating distribution to Jenny of a parcel of land with an $82,000 fair value and a $62,400 basis to JM. The land is encumbered with a $29,200 mortgage (JM's only liability). What is Jenny's basis in the land and her remaining basis in JM after the distribution

Answer 1

1. 62,400

2. 7800

Step-by-step explanation:

Required: 1.Jenny's basis in the land?

2. remaining basis in JM after the distribution?

Calculation:

Jenny's basis before distributions 55,600

Add: Debt (29200 x 50%) 14,600

Total 70,200

NOTE: Jenny' basis is increased for the other half of debt

Jenny's Basis in the land 62,400

Remaining basis in JM basis(70,200-62400) 7800