In an operating distribution, when a partnership distributes property other than money with a basis that exceeds the partner's outside basis, the partner assigns a carryover basis to the distributed asset and recognizes a gain.

Question

Quizplus · Accepted Answer

In an operating distribution, when a partnership distributes property other than money and the property's basis exceeds the partner's outside basis, the partner does not recognize a gain at the time of distribution. Instead, the partner takes a basis in the distributed property equal to their outside basis in the partnership before the distribution, which may require a reduction in the basis of the distributed property, not a carryover basis that exceeds the partner's outside basis.

In an Operating Distribution, When a Partnership Distributes Property Other