Mike contributed property to the MDB Partnership in 2009.At the time of the contribution,the basis in the property was $30,000 and its value was $55,000.In 2012,MDB distributed that property to partner Dana.Because distributions from a partnership to a partner are generally nontaxable,neither Mike nor Dana should recognize any gain on the distribution.

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Although distributions from a partnership to a partner are generally nontaxable, the basis of the distributed property to the partner is equal to the partnership's basis in the property immediately before the distribution. In this case, since Mike's basis in the property contributed was $30,000 and the value of the property was $55,000, the partnership's basis in the property would also be $30,000. When the property is distributed to Dana, her basis in the property would also be $30,000. If she later sells the property for more than $30,000, she would recognize a gain on the sale.

Mike Contributed Property to the MDB Partnership in 2009