Samantha's basis for her partnership interest is $85,000. If she receives a cash distribution of $95,000, her recognized gain is $10,000 and her basis for her partnership interest is reduced to $0. Samantha is still a partner after the distribution.

Question

Quizplus · Accepted Answer

Samantha's recognized gain is the excess of the cash distribution over her basis in the partnership interest, which is $10,000 ($95,000 - $85,000). Her basis is reduced to $0 because the distribution exceeds her basis, but she remains a partner.

Samantha's Basis for Her Partnership Interest Is $85,000