[Anonymous]

On September 1, 2015, Julie’s basis in her partnership interest was $75,000. In a distribution in liquidation of her entire interest on that date, she received properties A and B, neither of which were inventory or unrealized receivables. On September 1, 2015, property A had an adjusted basis to the partnership of $35,000 and a fair market value of $75,000. Property B had an adjusted basis to the partnership of $15,000 and a fair market value of $25,000. Based on this information, what was Julie’s basis in property A immediately after the distribution?

So the answer is 55,000,according to Gleim, because the remaining 20,000, after subtracting the 50,000 of AB’s of the properties, is allocated in proportion to the FMV differences of the properties (20,000* 40/50)+35,000.

Isn’t the remaining basis in the pship interest supposed to be allocated in proportion to the AB’s?

“In a complete liquidation, if the partner’s remaining basis in the partnership exceeds the adjusted bases of the distributed properties, then an increase is allocated among the properties with unrealized appreciation, in proportion to their respective amounts of unrealized appreciation (to the extent of each property’s appreciation), and then in proportion to the properties’ respective adjusted bases (considering the adjustments already made). “

[Anonymous]

If I'm reading correctly, the additional amount is first allocated to appreciation – until there is no more (meaning until they reach FMV), then, if there's any amount left to be allocated, it would be allocated using the FMV (AB plus adjustments already made for appreciation). No idea why they couldn't just say FMV instead of AB including adjustments already made…

I could be wrong, but that is my understanding.

[Anonymous]

I think I figured it out. Pretty sure that allocations of leftover pship basis will first be in proportion of unrealized appreciation followed by FMV with anything else left. BUT, when you have AB's in property being distributed that is larger than the pship basis, it is distributed in proportion to relative AB rather than FMV.

[Anonymous]

when i mean pship basis, I mean partner's interest in pship

[Author]

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