[Anonymous]

This may be a dumb/easy question, but I’m getting confused about the distributions in a partnership (liquidating and non). My understanding is that gain is recognized to the extent that cash received by a partner in excess of their interest in a partnership and that the basis of property distributed is usually the same basis as the partnership interest. But what would the basis of distributed property be if a partner had $100,000 interest in a partnership, and the partnership distributed $120,000 in cash and property of $50,000 to that one partner? Would it be zero? And the gain would only be $20,000?

[tuanxn]

Yup, you got it.

For a non-liquidating distribution:
The basis of the property distributed becomes the lesser of: (1) the remaining basis in the partnership or (2) the carryover basis of the property.

Since the cash distribution would bring the remaining partnership basis down to $0, the property would take a basis of $0.

For a liquidating distribution, the same would apply, but the property would take the remaining basis in the partnership regardless of what the carryover basis is.

[qfolmar]

@ CPAlmost,

If you don't mind me asking, what did you do differently for your last retake of FAR?

FAR-79
REG-82
AUD-83
BEC- August 31st

[Anonymous]

@tuanxn Thanks!

@ qfolmar Honestly it just came from me being angry at the test and putting in many long mornings and long nights. I work full time, but I made sure to review every chapter multiple times and hammer out MCQ over and over again. I need to take the same approach with REG, but it's not easy to find the motivation sometimes

[Author]

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