Marilyn is a partner in a continuing partnership.At the end of the current year,the partnership distributed to Marilyn in a proportionate,nonliquidating distribution cash of $40,000,inventory with a basis to the partnership of $12,000 and a fair market value of $10,000,and a parcel of land with a basis to the partnership of $30,000 and a fair market value of $40,000.Marilyn's basis in the partnership interest was $80,000 before the distribution.What basis does Marilyn take in the inventory and land,and what is her basis in the partnership interest following the distribution?
A)$12,000 basis in inventory; $30,000 basis in land; $38,000 basis in partnership.
B)$12,000 basis in inventory; $40,000 basis in land; $28,000 basis in partnership.
C)$10,000 basis in inventory; $30,000 basis in land; $0 basis in partnership.
D)$10,000 basis in inventory; $40,000 basis in land; $30,000 basis in partnership.
E)$12,000 basis in inventory; $28,000 basis in land; $0 basis in partnership.

Question

Quizplus · Accepted Answer

11ea7f05_2e8b_5aa6_92e1_4fa3d1ba054e_TB4123_00 *Marilyn's basis in the inventory equals the partnership's basis in the inventory.Whether the property is appreciated or depreciated does not matter.Her basis in the land is a substituted basis equal to the basis in the partnership interest following the distribution.

Marilyn Is a Partner in a Continuing Partnership