[vukz]

Quick question regarding contribtuions to partnerships……kind of a three part question…..I just want to see if my logic here is correct….seems like the material says one way and then contradicts itself…..just hoping for a little clarification

If I contribute an asset for a 25% partnership interest, I use my cost basis to calculate

$20,000 – Basis

$50,000 – FMV

My basis would be $5,000…..right?

Does the asset transfer to the partership based on the Basis of $20,000 or the FMV of $50,000

Also if I have a partnership basis of $65,000….I receive a liquidating distribution of $15,000 cash and $35,000 property…..should I not have a $15,000 capital gain and a $35,000 basis in the property….because the answers states a $0 gain and a $50,000 base in asset……..just wondering how you have a basis in an asset greater than its value?

Thanks for any help

Vukz

FAR (75)
AUD (76)
BEC (75)
REG (72), (80)

[tulip]

I believe that the partnership takes your adjusted basis ($20k).

On the liquidating distribution, there is no gain. Your basis in the partnership is $65k. You would only recognize gain if the value of what you received is MORE than your basis in the partnership. When you receive $15k cash, that reduces your basis to $50k. The property is worth $35K and this is the last distribution you will receive from the partnership. Rather than having a capital loss of $15k, you take a greater basis in the asset. If you later sell the asset, then you can recognize a loss (there is already a sort of built in loss of $15k).

Hope that makes sense.

BEC - 10/18/2010 - 79
FAR - 10/28/2010 - 82
AUD - 11/04/2010 - 73; 02/18/2011 - 86 - IT'S OVER!!!!!!
REG - 11/21/2010 - 83

[koolerz]

As it is a liquidating distribution, you basically have to “zero-out” your account.

So you take 15000 cash out, leaving 50000 in your account as the first step, and then the property is the last thing you receive, so you just assign whatever is left as the basis of the property – to clear your account.

FAR - 95, BEC - 86, AUD - 97, REG - 99

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