Mark contributed property to the MDB Partnership in 2012. At the time of the contribution, the basis in the property was $40,000 and its value was $50,000. In 2016, MDB distributed that property to partner Dara. Because this is a distribution of precontribution gain property, MBD (the partnership) may be required to recognize a gain that is allocated to all of the partners.

Question

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In a distribution of precontribution gain property, the partnership recognizes gain only to the extent of the precontribution gain, and it is allocated to the contributing partner, not all partners.

Mark Contributed Property to the MDB Partnership in 2012