Carl receives a proportionate nonliquidating distribution when the basis of his partnership interest is $60,000.The distribution consists of $20,000 in cash and property with an adjusted basis to the partnership of $35,000 and a fair market value of $45,000.Carl's basis in the noncash property and his remaining basis in the partnership interest are:
A)$60,000; $0.
B)$35,000; $0.
C)$35,000; $5,000.
D)$40,000; $0.
E)None of the above.

Question

Quizplus · Accepted Answer

After reducing the basis of Carl's partnership interest by the $20,000 cash received,his interest basis is $40,000 before considering the property distribution.The property takes the lesser of a substituted or carryover basis,or $35,000.Carl's basis in the partnership interest is reduced to $5,000.

Carl Receives a Proportionate Nonliquidating Distribution When the Basis of His